The RBI has reportedly asked a group of experts to look into fiat cryptocurrency, which is basically a digital currency that could serve as an alternative to the Indian rupee. According to sources, however, the country’s central banking institution still not comfortable with non-fiat cryptocurrencies like Bitcoin.
This comes at a time when the cryptocurrency world is muddled in controversies and uncertainties. With the Chinese government banning the issuance of new digital coins for fundraising, also known as initial coin offerings, and the Russian courts pronouncing the transfer of cryptocurrency into Roubles as illegal following the arrest of three men over illegal Bitcoin trading, the price of Bitcoins has dropped to $3,885.65 as of today from an all-time high of nearly $5,000 earlier this month.
Commenting on the development, RBI executive director Sudarshan Sen stated, “Right now, we have a group of people who are looking at fiat cryptocurrencies. As regards to non-fiat crypto currencies like Bitcoins, I think we are not comfortable with them.”
At present, the Reserve Bank of India regards cryptocurrencies as a violation of the country’s existing foreign exchange norms. This is because the conversion of Bitcoins into foreign exchange does not currently fall under the purview of the central banking institution, making such transactions highly unsafe and vulnerable to cyber attacks.
Sen, however, did not disclose any details as to how the appointed group will assist the RBI on the matter. When asked about fiat cryptocurrency, Sen explained, “Fiat will be when the Reserve Bank, for example, starts issuing digital currency which you can carry in cyberspace, you don’t have physical currency in your pocket.”
Indian Govt. Still Unsure About Legalising Cryptocurrency
In March 2017, the Reserve Bank of India (RBI) issued a statement against the usage of encrypted money like Bitcoin. The Central Bank also warned users, holders, and traders of security concerns surrounding Bitcoin or any other virtual currencies.