No Change In RBI’s Stance On Crypto Ban: Governor Shakatikanta Das

Reserve Bank of India (RBI) governor Shaktikanta Das on Friday (October 20) reiterated his stance on cryptocurrency ban, saying that there has been no change in the central bank’s position. 

“On crypto, I have already spelt out our position very clearly time and again and we continue with the same view. The IMF-FSB (International Monetary Fund-Financial Stability Board) synthesis paper also points out the risks involved in crypto,” Das told CNBC-TV18 on the sidelines of the Kautilya Economic Conclave 2023.

The RBI governor has made no qualms about the ‘dangers’ of cryptocurrencies in the past. In January this year, he went to the extent of equating crypto trading with gambling and called for banning all forms of cryptos. Last year, Das said that cryptos undermine financial stability and private cryptocurrencies would be the cause of the next financial crisis.

The entire top brass of the central bank has been a vocal critic of cryptos and has actively sought a ban on them. Das’ statement comes at a time when organisations and governments world over have called for the regulation of these virtual digital assets.

A 45-page IMF-FSB paper released last month argued for actively regulating crypto space rather than an outright ban. The synthesis paper also batted for safeguarding monetary sovereignty and stability, and argued against giving cryptos the status of legal tender. 

At the event on Friday, the RBI governor said, “Regulation is always on a scale of zero to 10. Zero regulation will mean that there is no regulation, it’s free for all, and 10 means you don’t allow it. In between zero and 10, it depends on where you are. FSB now has to look at the granular details of regulation.”

This follows India actively taking a stand for a global framework to regulate crypto assets during its erstwhile G20 presidency. During the concluding meeting at New Delhi last month, finance minister Nirmala Sitharaman actively pitched for such a regulation in partnership with the IMF and the FSB.

The joint G20 declaration supported swift implementation of the Crypto-Asset Reporting Framework (CARF) that calls for reporting of tax information on crypto transactions in a standardised manner. It aims to foster exchange of crypto-related data and bring tax transparency with regards to financial accounts held abroad.

Prior to this, Prime Minister Narendra Modi, in August, also called for a global framework to regulate cryptocurrencies.

While the RBI has been terse in its commentary, the Centre has not expressed any opinion on crypto ban publicly. It has rather imposed a heavy taxation regime on cryptos to likely dissuade users from trading in crypto. 

This includes a 30% tax on gains from crypto transactions and a separate tax deducted at source (TDS) on crypto transactions of above INR 10,000. This has made cryptos less attractive asset class and taken the shine off the sector. As a result, volume on crypto exchanges have plummeted. The collapse of giants such as FTX has further steered users away from cryptos.