Governor of the Reserve Bank of India, Shaktikanta Das, has issued a new warning to cryptocurrency investors, stating that these digital currencies may represent a risk to financial stability. Shaktikanta Das emphasized in a statement that it was his responsibility to educate cryptocurrency investors. “Investors must remember that they are doing so at their own risk,” Das mentioned after the monetary policy statement at a press conference. Investors should keep in mind that “cryptocurrency has no underlying, not even a tulip,” he said, adding that private cryptocurrency will jeopardize the RBI’s financial stability mandate.
In India, such tokens are illegal because the government hasn’t passed the legislation. In her Budget 2022 speech, Union Finance Minister Nirmala Sitharaman stated that revenues from the purchase or sale of cryptocurrency and other virtual assets fall under 30% tax beginning next year. However, a broader examination of cryptocurrency regulation is in the works.
Finance Minister Nirmala Sitharaman stated in the budget that the RBI would create a central bank-backed digital currency this year. Except for what the government said, Das said he is not committing to any dates for the establishment of a central bank digital currency. Das said that India couldn’t rush into introducing the CBDC because there are numerous threats, including cyber security threats, that people must be aware of.
The RBI has been working on a CBDC for the last 18-24 months, mentioned by T Rabi Sankar, deputy governor of the central bank. It will evaluate design features along with other components of the CBDC next year before releasing it to the public.
Sitharaman also stated in her budget speech that the RBI would introduce a digital rupee in the coming fiscal year. This will necessitate changing the RBI Act to incorporate digital currency issued by the central bank under the definition of a banknote.
T Rabi Sankar, Deputy Governor of the Reserve Bank of India, stated that the upcoming digital rupee would carry similar features to the ordinary rupee. The Central Bank Digital Currency project is still in the works.