• RBI has plans to impose a ban on cryptocurrencies, says Nirmala Sitharaman
  • Sitharaman calls for global coordination for regulating crypto industry
  • RBI considers cryptocurrencies as a 'real danger'

Indian Finance Minister Nirmala Sitharaman has said that the Reserve Bank Of India (RBI) is working on banning cryptocurrencies and the government expects global cooperation if such a ban is imposed.

According to a report from ET, Sitharaman spoke about the future of cryptocurrencies in the world's biggest democracy in Monday's session of Lok Sabha, the lower house of India's bicameral parliament.

"Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards," said Sitharaman.

The report noted that India’s central bank has continuously warned the citizens of India against cryptocurrencies, even calling it a "real danger" in its annual report.

"We must be mindful of the emerging 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," said RBI governor Shaktikanta Das in the 25th edition of the Financial Stability Report (FSR) released June 30.

Additionally, Sitharaman also pointed out that the RBI is framing regulations for cryptocurrencies keeping in mind that these blockchain-based assets are prohibited.

“This is in view of the concerns expressed by RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country,” she added while speaking in the monsoon session of the parliament.

The Finance Minister stated that as per the RBI's stance, cryptocurrencies are “not real” currencies since they are not backed by actual banks which follow a particular monetary system.

“Further, the value of fiat currencies is anchored by monetary policy and their status as legal tender. However, the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored,” she said.

The government of India has shown no mercy to crypto investors as the nation imposed 30% taxes on crypto profits and 1% TDS on all crypto transactions.

Finance minister Nirmala Sitharaman unveiled her budget to parliament
Finance minister Nirmala Sitharaman unveiled her budget to parliament AFP / Prakash SINGH