Minister’s statement in parliament indicates law on cryptocurrencies may be closed for now
Minister’s statement in parliament indicates law on cryptocurrencies may be closed for now
The Reserve Bank of India has recommended a ban on cryptocurrencies, citing “volatile implications” for the country’s monetary and fiscal health, but a law regulating or banning cryptocurrencies can only take effect if there is some sort of international agreement. Yes, the Finance Minister said on Monday.
“Cryptocurrencies are borderless by definition and require international cooperation to prevent regulatory arbitrage,” Finance Minister Nirmala Sitharaman said in a written reply to a question by Lok Sabha MP Thol Thirumavalavan.
“Therefore, any legislation for regulation or restriction can be effective only after significant international cooperation on the assessment of risks and benefits and the development of common classifications and standards,” she said.
The minister’s comments assume significance as they suggest a law to rein in the use of cryptocurrency, which was included in the business list of parliament for two sessions last year, until some form of global compact. can’t be confirmed over them, is off the table until then. regulation.
Informing the Lok Sabha about RBI’s concerns on the adverse effects of cryptocurrencies for the economy, Ms Sitharaman said: “RBI noted that cryptocurrency is not a currency as every modern currency needs to be issued by a central bank or government. it occurs.
“Furthermore, the value of fiat currencies is anchored by monetary policy and their status as legal tender, although the value of cryptocurrencies depends entirely on speculation and expectations of high returns that are not anchored well, Hence it will have destabilizing effect on monetary and fiscal stability of a country,” he said.
“In view of the concerns expressed by the RBI on the destabilizing effect of cryptocurrencies… the RBI has recommended enactment of legislation on this sector. RBI is of the view that cryptocurrencies should be banned,” the minister said.
The ministry noted that the central bank has been cautioning people against the use of virtual currencies since 2013. In April 2018, RBI prohibited regulated entities from dealing in virtual currencies or providing services to any person or entity to facilitate transactions. with them or their disposal. The direction was quashed by the Supreme Court in March 2020.
Subsequently, in May 2021, the central bank advised its regulated entities to conduct transactions in such currencies, in line with the regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering, Combating Financing. Continue the customer due diligence process. Foreign Exchange Management Act (FEMA) norms for terrorism, liability under the Prevention of Money Laundering Act, 2002, etc. and foreign remittances.