India’s Draconian Take On Crypto, Is It Aiming For A Blanket Ban?

The Central Bank of India has been displaying strong hostility towards crypto for a long time now. Ever since cryptocurrency has gained popularity in a nation that inhabits 17.7% of the world’s population, the Reserve Bank of India (RBI) has been eyeing ways to regulate the sector.

The RBI governor, Shaktikanta Das, has again expressed severe concerns about regulating the industry. This has kept crypto investors and enthusiasts on their guard as the annual budget date draws closer. The Central Bank of India has now issued a stern warning against the use of Bitcoin and other virtual currencies.

The situation was aggravated further owing to the crash of FTX. Governor Shaktikanta Das has time and again called crypto an ‘unstable instrument,’ which is ‘nothing but gambling’ as private digital assets hold no intrinsic value whatsoever.

At the Business Today Banking and Economy Summit, Governor Shaktikanta Das argued that private digital assets should be banned as it holds a ‘make-believe factor.’ He also proceeded to state that crypto is nothing but a ‘100 percent speculation world.’

Dollarization Of The Indian Economy

The RBI’s governor, Shaktikanta Das, has stressed that the FTX crash has proven how cryptocurrency being a speculative industry is detrimental to the economy. India previously stated that the influx of private digital assets would cause the dollarization of the economy, which is not ideal for the nation.

Das, speaking at the event, echoed the same sentiments, saying, “Dollarization would increase due to rising crypto usage and may act against the country’s sovereign interest.” Not only has the dollarization of the economy concerned India, but so has the regulatory framework for digital assets.

Ironically enough, despite concerns regarding the same, India has still not finalized a bill to regulate the industry for years now. On the contrary, Nirmala Sitharman did not suggest a blanket ban at the G20 summit in October; she instead mentioned that India would be aiming to introduce a technology-driven regulatory framework to better regulate the assets.

So Is India Not Equipped Enough To Regulate Crypto?

The question remains if India’s government is capable enough to regulate the industry. All the animosity towards the industry might be a false front to deter enthusiasts from staying away from the industry.

RBI has also mentioned that private digital assets might cause ‘financial instability’, along with announcing that if private virtual currencies are allowed to operate in the country, the RBI “may likely fail” to monitor these transactions.

Das added:

Crypto masquerading as a financial asset is a completely misplaced argument. Our country does not promote gambling.

Calling crypto a form of gambling does not take away the focus from the fact that the Indian government has in fact admitted to not laying the proper rules for governing the asset. It is yet to be seen if India can work out a regulatory framework to better scrutinize digital assets before the annual Union Budget of 2023.