• Wed. Jun 22nd, 2022

CBDCs will ‘kill’ cryptocurrencies, says Reserve Bank of India Deputy Governor

ByHazel R. Lang

Jun 3, 2022

The Reserve Bank of India (RBI) believes that the emergence of central bank-issued digital currencies (CBDC) will mark the end of private cryptocurrencies.

The bank’s deputy governor, T. Rabi Sankar, said that private cryptocurrencies have the potential to be used for undesirable purposes despite being backed by state-of-the-art technology, the Indian time reported June 3.

Sankar’s stance on private cryptocurrencies adds to the Indian government’s objection to cryptocurrencies ahead of a proposed unveiling of a consultation paper on digital assets.

“We think CBDCs might actually be able to kill any small case that might be for private cryptocurrencies,” Sankar said.

Crypto Players Reject RBI

However, crypto industry players have rejected the RBI’s position regarding CBDCs and private digital assets. Vikram Subburaj, CEO of Giottos Crypto Exchange, said the RBI projection is a move to stifle innovation in the crypto industry.

Sankar, who was speaking at an event hosted by the International Monetary Fund (IMF), said the agency should lead the global debate on cryptocurrency regulation.

India’s efforts to regulate cryptocurrencies have gained momentum over the past year, with officials revealing they considered other countries’ regulations when drafting the consultation paper.

Officials led by RBI Governor Shaktikanta Das have previously demonstrated different scenarios that could emerge from the legalization of cryptocurrencies. As reported by Finbold, Das warned that denomination of most cryptocurrencies by the dollar could lead to the dollarization of the country’s economy.

He said dollarization goes against India’s sovereign interests while posing a digital threat to financial stability.

Additionally, as the country moves towards enacting a binding law to govern the sector, various laws have been proposed in recent months. For example, in this year’s annual budget, the government promised to impose a 30% tax rate on profits from cryptocurrency investments.

The recent crash of the Terra ecosystem has accelerated the push to regulate cryptocurrencies, with millions losing their investments. The state, through the RBI, has in the past warned citizens against investing in crypto during a time when digital assets are attracting more residents to the country.

Source link