Crypto-ban | Nirmala Sitharaman: RBI bats for crypto ban, government seeks global cooperation for better implementation: FM Sitharaman
Finance Minister Nirmala Sitharaman addressed issues related to cryptocurrencies in Lok Sabha today, “Cryptocurrencies are by definition borderless and require international cooperation to prevent regulatory arbitrage. Therefore, any regulation or prohibition legislation can be effective only after significant international cooperation on risk and benefit evaluation. and the development of common taxonomy and standards. ”
RBI has repeatedly pointed out the problems with digital assets that call into question their underlying fundamentals and use cases. RBI Governor Shaktikanta Das has stepped in to even call it a “real danger” in the central bank’s annual report.
In the preface to the 25th edition of the Financial Stability Report (FSR) released on June 30, Das also said that as the financial system becomes increasingly digitalized, cyber risk increases and needs special attention.
“We need to be aware of the new risks on the horizon. Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name,” Das said.
The Minister of Finance said that the RBI has recommended the formulation of legislation for this sector, and that it is of the opinion that cryptocurrencies should be banned.
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“This is in light of the concerns expressed by the RBI about the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country,” she added as she spoke at the monsoon session of parliament.
Sitharaman said that the RBI mentioned that cryptocurrencies are not a currency because every modern currency must be issued by the central bank / government.
“The value of fiat currencies is also rooted in monetary policy and their status as legal tender. However, the value of cryptocurrencies rests solely on speculation and expectations of high returns that are not well-established, “she noted.
Cryptocurrency exchanges and blockchain companies are trying to merge their own independent association after the Internet and Mobile Association of India (IAMAI) dismantled the Blockchain and Crypto Assets Council (BACC) – a representative body – last week, ETtech reported today.
Talks to close BACC – set up in 2017 – had been going on for some time amid a growing conflict between the Reserve Bank of India (RBI) and crypto exchanges over the legal status of the virtual currency in India.
Earlier this year, the Indian government announced the tax on gains arising from virtual assets at a flat rate of 30% with no exemptions or deductions in the Union Budget. Furthermore, every buyer of virtual digital assets will now have to pay 1% as TDS.
The tax shall be deducted at the time of crediting the amount or at the time of payment to the resident, whichever occurs earlier. The tax is deducted only if the amount paid exceeds the specified limit.
