RBI MPC: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said that the central bank is ‘concerned’ about cryptocurrencies as they can ‘hamper’ the country’s financial stability.
Speaking to reporters after announcing the RBI MPC decisions, Sanjay Malhotra touched upon cryptocurrencies. He was asked about them in light of the Supreme Court’s observation on cryptocurrency last month.
Malhotra said that there has been no new development on cryptocurrencies. “There is no new development as far as crypto is concerned. A committee of the government is looking after this.”
However, he said that the RBI is concerned about cryptocurrencies.
“Of course, as you are aware, we are concerned about crypto because that can hamper financial stability and monetary policy,” Malhotra said.
Supreme Court’s observation on cryptocurrency
The Supreme Court, in an observation on 19 May, asked the Centre why it is not making a clear-cut policy on cryptocurrency.
“Why does Centre not come out with a clear-cut policy on regulating cryptocurrency,” a bench of Justices Surya Kant and N Kotiswar Singh asked.
The remarks from the Supreme Court came when it was hearing a bail plea of an accused who was held for illegal Bitcoin trade in Gujarat. The accused, Shailesh Babulal Bhatt, had moved the top court for bail.
The SC termed Bitcoin trade as an illicit trade, more or less like “hawala” business.
On 5 May, the top court said trading in Bitcoin in India was like “dealing with a refined way of Hawala business” as it lamented the Centre’s inability to come up with a clear regime on regulating virtual currency so far.
Is cryptocurrency legal in India?
India is currently working on a discussion paper on cryptocurrencies, and an interministerial group (IMG), comprising officials from the RBI, Sebi, and the finance ministry, is investigating global norms.
In the absence of any regulation, cryptocurrency is not yet illegal in India.
The discussion paper will give the stakeholders an opportunity to give their views before India decides on its policy stance on cryptocurrencies.
In 2022, the government announced a flat 30 per cent tax on gains arising from cryptocurrencies. Taxing income from cryptocurrencies does not necessarily and explicitly legalise cryptocurrencies.
Currently, crypto assets are unregulated in India.