Officials at the Indian central bank have renewed their efforts to ban cryptocurrency. Finance Minister Nirmala Sitharaman supported the motion during a parliamentary meeting on July 18, saying digital assets have a “destabilizing effect” on the “fiscal stability of a country.”
Indian officials show indecisiveness
The Reserve Bank of India (RBI) first attempted to ban crypto in April 2018, citing risks associated with “Consumer protection, market integrity, and money laundering are just a few of the many areas we cover..”
However, the Supreme Court overturned that ruling in March 2020. It declared the ban invalid. But, talk of an impending ban continued.
In March 2021 Sitharaman appeared on national television, saying the government was not “shutting all options off.” Instead, Sitharaman spoke vaguely of “a window” to enable “cryptocurrency experiments.”
Indian crypto investors took the uncertainty as a victory, despite it being unclear. WazirX co-founder Nischal Shetty According to the announcement, developers were encouraged to create and win.
Now fast forward and you will see that the imposition of a 30% Goods and Services Tax (on all cryptocurrency and NFT) and an additional 1% Tax (on transactions greater than INR 10,000 ($125), respectively, have had the result of reducing trade volumes at major exchanges.
However, with less than a month to go before the 1% transaction taxes goes live, senior legislators are reiterating their call for an outright ban of cryptocurrencies.
New calls for crypto ban
Sitharaman voiced support for the RBI’s call to ban cryptocurrencies in a parliamentary discussion. Justifying her view, she spoke of concerns about the “adverse effect” digital assets have on the economy.
She clarified that only central banks-issued currencies meet the criteria for legal tender. She stated that cryptocurrency valuations are speculation-based and can be detrimental to fiscal stability.
“However, the value of cryptocurrency is based solely on speculations. It will be difficult to anchor high expectations for returns. impact on the country’s monetary and financial stability.“
Sitharaman mentioned the RBI had “Recommended for the framing and implementation of legislation,” but other than calling for a ban, she did not give further details of the proposal.
She signed off and acknowledged that international cooperation was necessary to pass a ban to prevent “regulatory arbitrage.”