While reiterating India’s Central Bank’s concern about cryptocurrencies, the Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday that cryptocurrencies are a big threat to the financial and microeconomic stability of India. He also warned investors who haven’t yet invested in digital assets.
In a press conference Shaktikanta said:
“As far as cryptocurrencies are concerned, the RBI stance is very clear. Private Cryptocurrencies are a big threat to our financial and macroeconomic stability. They will undermine RBI’s ability to deal with issues related to financial stability. I think it is my duty to tell investors that when they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset)… not even a tulip.”
Dass’s comments come as yet another blow to the crypto industry in India after the Union Finance Minister Nirmala Sitharaman introduced a 30% tax on crypto assets including non-fungible tokens (NFTs). Nirmala also imposed an additional 1% tax deducted at source (TDS) on every crypto transaction.
India’s Central Bank Digital Currency (CBDC) project
The crypto community in India is also eagerly waiting for the proposed Central Bank Digital Currency that the Reserve Bank of India (RBI) is said to be working on.
However, the RSI governor did not give a timeline for the CBDC during the press conference.
About the CBDC, the governor said:
“We can’t give a timeline on CBDC. But what I can say is that whatever we are doing, we are doing it very carefully and cautiously. We have to keep risks like cyber-security and counterfeiting in mind. So, we are proceeding cautiously and can’t give a timeline.”
However, the governor confirmed that work on both retail and wholesale models of the proposed CBDC is ongoing though he could not confirm which of the two models shall be tested first.
The governor said:
“Which model is tested first will be decided later… We are not working with any external agencies when it comes to the CBDC. We are working with the CBDCs in our ecosystem. Any decision to engage with any other agencies will be taken later. We are open to trying out all possible technologies for CBDC. It depends on the use case. So, it won’t be one or the other.”
There was however some leakage as to when Indians should expect the CBDC from the Union Finance Minister Nirmala Sitharaman, who said that the RBI would introduce a digital Rupee in the next financial year.