Media: RBI officials fear cryptocurrency-driven dollarisation of the Indian economy

Cryptocurrencies could lead to долларизации of part of the economy, which would run counter to India’s sovereign interests. RBI officials said this, The Economic Times reports, citing sources.

According to sources, senior regulator officials, during a briefing to the Standing Committee on Finance of Parliament, pointed to potential risks to the country’s financial stability. They believe that cryptocurrencies could potentially replace the rupee in domestic and external transactions.

“Almost all cryptocurrencies are denominated in dollars and issued by foreign private individuals, which could ultimately lead to the dollarisation of part of our economy and would run counter to the sovereign interests of the country,” RBI officials told the publication.

According to reports, officials also expressed concerns about the impact of digital assets on the banking system.

In recent years, government statements on cryptocurrency legislative initiatives have ranged from a complete ban, even with criminal liability, to possible regulation as assets.

In November 2021, the RBI warned of ‘serious concerns’ regarding cryptocurrencies in the context of macroeconomics and financial stability.

In January 2022, the Prime Minister of the country Narendra Modi called for a unified approach in shaping the regulatory framework for the crypto industry.

In April in India imposed a 30% tax on profits from cryptocurrency transactions and the contentious 1% levy under TDS. Later reports indicated plans by authorities to increase the tax burden on the sector.

Earlier in May, the Computer Emergency Response Team issued a directive requiring cryptocurrency exchanges to retain customer data for five years. In this way, authorities aim to curb tax evasion.

Subscribe to ForkLog news on Telegram: ForkLog Feed — the full feed of news, ForkLog — the most important news, infographics and opinions.