To decide the future of cryptocurrency, India needs international cooperation, according to its finance minister
The Indian finance minister reaffirmed RBI’s position on the cryptocurrency market, stressing that speculation drives it.
Nirmala Sitharaman, the finance minister of India, has urged international cooperation on cryptocurrencies, weighing their benefits and drawbacks to create a uniform standard and taxonomy.
The Indian central bank encouraged the government to forbid the use of cryptocurrencies because they pose a risk to financial stability, Sitharaman said in response to a question about cryptocurrencies in the Lok Sabha, which is the lower chamber of the Indian parliament. The administration, though, is seeking a worldwide strategy. She spoke:
“Any legislation for regulation or banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”
She added that the Indian central bank’s position on the value of cryptocurrencies is based on guesswork. She continued, “Monetary policy and their status as legal tender serve as the foundation for the value of fiat currencies. However, the value of cryptocurrencies is primarily based on unfounded speculation and unrealistic expectations of big profits.
India Has Expressed Anti-crypto Sentiments Throughout
The Indian federal bank, Reserve Bank of India (RBI), has maintained a position against cryptocurrencies since 2013, issuing numerous warnings against investing in digital assets and even forbidding banks from providing services to crypto businesses in 2018. Following a supreme court decision in 2020, the banking prohibition was lifted.
While the Indian government has not yet decided whether to ban or regulate the emerging crypto economy, it moved quite quickly to create and execute two crypto tax regulations that have disastrously impacted the sector.
The minister of finance proposed a 30% tax on unrealized losses and a 1% tax deduction at source during the January parliamentary session (TDS). The restrictions, which drew significantly from the nation’s laws governing gaming and betting, immediately reduced trading volume across exchanges just weeks after the new 30 percent tax went into force.
Following a 1 percent TDS implementation on July 1st, trading volumes and trader interest fell even further. Many growing crypto unicorns have begun relocating to jurisdictions with crypto-friendly regulations, like Dubai and Singapore, hoping for a favorable regulatory approach.