MUMBAI: The Reserve Bank of India (RBI) has said in a presentation to its central board that a ban on cryptocurrencies needs to be total and partial restrictions will not work.
In the presentation, senior officials highlighted the issue of trackability of transactions, valuation of cryptos, the extreme price volatility, legal issues and identifying the various actors in the crypto transaction chain as areas of concern. Among the board members Revathy Iyer (former deputy comptroller & auditor general) expressed the need to proceed with caution. However, another board member Sachin Chaturvedi (director-general at the Research and Information System for Developing Countries) cautioned against policymakers taking extreme steps and risk being cut off globally. He highlighted instances in the past when the government had to backtrack.
Debasish Panda, secretary at the department of financial services, who also participated in the meeting, did not comment on the crypto issue. The 592nd meeting of the central board also discussed the status of the central bank’s digital currency. Additionally, the board took up the half-yearly income statement of the RBI for the six months ended September 30, 2021.
The board’s discussion on cryptocurrencies comes at a time when the government has listed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for the Winter Session of Parliament. The Centre has been tight-lipped about the legislation. The wording on the bill — stating that it seeks to create a facilitative framework for a central bank digital currency and allow crypto for certain exceptions to promote the underlying technology — has given rise to speculation that cryptos may be legalised as an asset.
The RBI has been steadfast in its opposition to giving recognition to alternate currencies. While the central bank has been forced to retract its 2018 ban on cryptocurrencies following a Supreme Court order, it has not changed its mind. “There is a need for much deeper discussions (on crypto). When the central bank says it has much deeper concerns from the point of macroeconomic and financial stability, there are far deeper issues involved which form part of this,” RBI governor Shaktikanta Das had said in October 2021 while speaking at an event. He said that there was a need for discussion on these concerns.
“The board also discussed various areas of operations of the Reserve Bank, including the functioning of the local boards, activities of select central office departments and the draft ‘Report on Trend and Progress of Banking in India, 2020-21’,” the RBI said in a statement. Central bankers present in the board meeting included deputy governors Mahesh Kumar Jain, Michael Debabrata Patra, M Rajeshwar Rao, and T Rabi Sankar. Other directors of the central board Satish K Marathe and S Gurumurthy also attended the meeting.