The Reserve Bank of India (RBI) is said to be worried about cryptocurrency acceptance, stating that it will lead to the “dollarization” of the Indian economy.
According to an unidentified source mentioned in a Monday piece in the Indian edition of the Economic Times, the RBI is concerned about cryptocurrencies dominated by the US dollar losing market share from the Indian rupee.
According to the magazine, RBI officials, including Governor Shaktikanta Das, held a briefing to the Parliamentary Standing Committee on Finance this week. They emphasized their pessimism about the possible influence of cryptocurrency on the financial sector. According to an unnamed source:
“Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities, it may eventually lead to dollarization of a part of our economy which will be against the country’s sovereign interest.”
RBI thinks that crypto might undermine the economy
They cautioned that “it will substantially impair the RBI’s ability to establish monetary policy and govern the country’s monetary system.”
The RBI was said to be irritated by the prospect of digital assets being used in cross-border transactions rather than the rupee, and the typical anti-crypto cliches of terror funding, money laundering, and drug trafficking were also highlighted.
The RBI has shown an anti-crypto attitude twice this month, with Coinbase CEO Brian Armstrong stating last week that the RBI forced the exchange to shut down its United Payments Interface (UPI) in India.
Since announcing plans to regulate the business in December, it appears that the Indian government is not fond of digital assets and has adopted a cautious approach to digital assets.
On April 1, the government implemented a 30% tax on digital asset ownership and transfers, as well as a slew of other stringent taxation requirements based on gambling and lottery ticket win legislation.
In the 10 days following the legislation’s introduction, trading volume on major Indian exchanges fell by as much as 70%.