Amid RBI's tough stance, what will be cryptocurrencies' fate in India?

At a summit organised by the Business Standard, RBI governor Shaktikanta Das expressed doubt over the credibility of reports claiming huge public interest in cryptocurrencies. Das said it looked like a marketing ploy to attract more people into that system. He was referring to a recent report of a research firm which claimed that at least 7.9 per cent Indians have invested $10 billion dollars in virtual currencies.
 
Trade in cryptocurrencies is unregulated in India. The government is consulting various stakeholders, including the RBI, to finalise the contours of a bill on it. RBI’s internal panel report on cryptocurrencies is also expected in a few days. So let us examine what the RBI and the government are thinking about it 
 
RBI’s stance
The Reserve Bank of India’s stand on virtual currencies had been clear since the very beginning. It always looked at it with suspicion and considered it as a threat to the country's macroeconomic and financial stability. On Wednesday, the RBI governor reiterated his strong views against cryptocurrencies, saying that they are a cause for serious concern.
 
At the Business Standard-BFSI Summit, this is what the RBI governor told to consulting editor Tamal Bandyopadhyay:
 

• Cryptocurrencies are a cause for serious concern
• They will have impact on macroeconomic and financial stability
• The number of participants in the crypto market exaggerated

 
The government’s stand so far
 
The government is reportedly considering a middle path on cryptocurrencies. A government source recently told a financial daily that while the hardline stance of banning cryptocurrencies outright was not considered feasible due to the large investments made in such instruments by Indians, these virtual currencies were also unlikely to be allowed as a legal tender.
 
Meanwhile, the government is again examining a proposal to tax the ecosystem, which includes cryptocurrencies and NFTs. In fact, the tax department wants the framework for taxing the use of blockchain for commercial purposes to be implemented even before legislation on cryptocurrencies is brought in.
 
Meanwhile, the tribe of crypto traders is growing in India. And all the stakeholders are looking towards the government to arrive at a consensus on the regulation of these virtual assets. According to some reports, the government is planning to table the bill in the budget session of Parliament next year.

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