Reserve Bank of India intends to ban cryptocurrencies

The confrontation between the Reserve Bank of India and cryptocurrencies lasted throughout 2022. The regulator imposed high taxes on cryptocurrency transactions due to concerns over the “dollarization” of the Indian economy, which will result from the widespread use of cryptocurrencies as a form of investment and daily payment. India's Finance Minister Nirmala Sitharaman has urged the G20 nations to incorporate digital assets into the Automatic Exchange of Information (AEOI), which is in line with the RBI's position. 

It is not surprising that such measures by the government and public sentiment in the country caused the Indian crypto market to experience a sharp decline. The Reserve Bank of India decided at the end of the year to be frank about the future of digital assets in India.

Our view is that it (private cryptocurrencies) should be prohibited because if it is allowed to grow, that is, if you try to regulate it and allow it to grow…please mark my words the next financial crisis will come from private cryptocurrencies,

Reserve Bank Governor Shaktikanta Das said at the BS BFSI Insight Summit 2022.

According to him, the serious risks associated with digital assets jeopardize the state's financial stability. Das believes that everything that has happened this year, especially “the latest episode around FTX,” is eloquent proof of what he has said.

The Reserve Bank Governor claims that private digital assets are the result of a system hack that denies the existence of a central bank's own currency and is not subject to the financial industry's regulations. According to his data, the total value of cryptocurrencies has dropped sharply from $190 (188) billion to $140 billion. He is concerned, however, about the lack of rational explanations for such dramatic fluctuations.

I think the term cryptocurrency or private cryptocurrency is a fashionable way of describing what is otherwise a 100 percent speculative activity.

Das is convinced that the regulator's position does not require further explanation. 2023 is probably going to be a very challenging year for the Indian cryptocurrency market.