Central Bank Members Not In Favour Of Private Cryptos, Express Concerns

The central board of directors of the Reserve Bank of India (RBI) today (December 17th, 2021) discussed various aspects of private cryptocurrencies and central bank digital currency, said an RBI statement.

The discussions came at a time when stakeholders in the crypto space in India are awaiting the introduction of the cryptocurrency bill at the parliament.

Further, CNBCTV18 has reported citing sources that internal members of the central bank do not favour private cryptocurrencies and majority of the board members expressed concerns during the meeting.

The members present in the meeting included deputy governors Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar and other directors of the Central Board–Satish K. Marathe, S. Gurumurthy, Revathy Iyer and Sachin Chaturvedi attended the meeting. 

According to the RBI statement, Debasish Panda, secretary, department of financial services also attended the meeting. The meeting was held in Lucknow under the chairmanship of RBI Governor Shaktikanta Das.

The government has listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for introduction in the parliament during its ongoing winter session.

Finance Minister Nirmala Sitharaman recently said that a ‘well consulted’ bill is coming through and it will be tabled in the parliament, once the cabinet clears it.

The bill also seeks to create a facilitative framework for the creation of the official digital currency to be issued by the RBI.

The government has informed the parliament that RBI in October received a proposal from RBI to widen the definition of ‘bank note’ to include currency in digital form.

However, recent media reports have said that the bill is unlikely to be introduced in the ongoing winter session of the parliament.

Earlier this week, there were reports about how Prime Minister Narendra Modi would soon decide on a regulatory framework for cryptocurrencies amidst conflicting viewpoints among different stakeholders.

The bill is likely to propose a monetary penalty of INR 20 Cr or a jail term of 1.5 years in case of violation of its norms. The government is expected to recognise cryptocurrencies as an asset class and prohibit their usage as currency.

Concerns and apprehensions have been doing the rounds over a likely ban on all cryptocurrencies and investments into them.

Concerns were fueled among the stakeholders as the description of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, showed that it “seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.

Speaking at the Hindustan Times Leadership Summit on December 4th, 2021

Finance Minister Sitharaman had said that there is a lot of speculation going on in the matter which is not healthy at all.

During the current parliament session, the government has told both the houses that it does not collect data on the cryptocurrency transactions and that there is no ready information on tax collected from investments made in the virtual asset.

India has the largest number of crypto owners among all countries in the world – more than 100 Mn, according to BrokerChooser. 

The investment in cryptocurrencies grew from nearly $923 Mn in April last year to $6.6 Bn in May this year in the country.