RBI warns of crypto ‘dollarisation’ of Indian economy

Officials at the Reserve Bank of India (RBI) are reportedly sounding the alarm again about the adoption of cryptocurrencies, which they claim will eventually lead to the “dollarization” of the local economy.

According to a Monday report by the Indian arm of the Economic Times — which cited unnamed sources — the RBI’s concerns center on the dollar-dominated cryptocurrency taking market share from the Indian rupee.

the publication notes RBI officials and its governor, Shaktikanta Das, briefed the Parliament Standing Committee on Finance this week. In it, they are very skeptical about the potential impact of cryptocurrencies on the financial system. An unnamed official was quoted as saying:

“Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities, and it could eventually lead to the dollarization of parts of our economy, which would be against the sovereign interests of the nation.”

“it [crypto] would seriously impair the RBI’s ability to determine monetary policy and regulate the country’s monetary system,” they added.

The RBI is said to be particularly annoyed by the concept of using cryptocurrencies instead of rupees in cross-border transfers, while common anti-crypto tropes such as terrorist financing, money laundering and drug trafficking have been highlighted again.

This is the second time this month that the RBI has expressed anti-crypto action, Coinbase CEO Brian Armstrong It was hinted last week that the exchange’s sudden stop of its United Payments Interface (UPI) in India was due to pressure from the Reserve Bank of India.

“So, a few days after the launch, we ended up disabling UPI due to some informal pressure from the Reserve Bank of India (RBI), which is the equivalent of the Treasury there,” he said, adding that they were basically ” “Soft pressure behind” attempts to disable some of these scenarios for possible payments via UPI. “

related: Indian minister hopes global crypto rules will reduce money laundering risks

It seems that the Indian government is also not bullish on digital assets recently, instead taking a relatively stifling approach to cryptocurrencies after outlining its intentions Standardize the industry in December.

On April 1, the government implemented 30% crypto tax Digital asset holdings and transfers, and several other strict tax guidelines based on the tax rules for gambling and lottery winnings.Trading volume on India’s top cryptocurrency exchanges in about ten days after the law came into force Down as much as 70%.