Cryptocurrencies require international cooperation to “prevent regulatory arbitrage”, Finance Minister Nirmala Sitharaman told the Lok Sabha on the first day of the monsoon session of Parliament.
The government is pushing for international cooperation in regulating cryptocurrencies, while the Reserve Bank of India (RBI) has said it wants to ban such digital assets.
“…any legislation to regulate or ban can only be effective after significant international cooperation in assessing risks and benefits and developing a common taxonomy and standards,” Sitharaman said.
She said the RBI has proposed a ban on cryptocurrencies because it believes the asset could threaten the economy.
“RBI has mentioned that cryptocurrencies are not currency because any modern currency has to be issued by a central bank/government. In addition, the value of fiat currencies is anchored by monetary policy and their legal tender status, but the value of cryptocurrencies is based solely on speculation and expectations of high returns, which are not well anchored, and will therefore have a destabilizing effect on the monetary and fiscal stability of a country.”
“Cryptocurrencies are by definition borderless and require international cooperation to prevent regulatory arbitrage,” Sitharaman.
RBI Governor Shaktikanta Das called cryptocurrencies a “real danger” and cited their risk in the central bank’s annual report.
Anything that acquires value on the basis of an apparent belief “without any basis” is just speculation under a fancy name, the RBI said in its annual report.
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