RBI is planning to launch its own digital currency.
Highlight
- The crypto market has wiped out almost 60% of its value from its peak
- In India, the government is preparing a consultation paper which is in the final stages
- According to an estimate, there are around 15 to 20 million crypto investors in India.
Reserve Bank of India (RBI) Governor Shaktikanta Das has once again cautioned investors against trading in cryptocurrencies. He added that cryptocurrencies pose enormous financial stability risks to the economy, adding that the central bank has informed the government of its stance on cryptocurrencies.
Notably, the central bank, which is planning to launch its own digital currency, has on several occasions expressed its reservations on private cryptocurrencies, citing concerns over macroeconomic stability. Das had earlier also said that trading in cryptocurrencies carries a lot of risk and can lead to volatility in the financial market.
“We have already conveyed our stand (on cryptocurrencies) to the government. They pose a huge risk to financial stability,” he said to mark the 75th anniversary of independence organized by the Central Board of Indirect Taxes and Customs (CBIC). Speaking at the prestigious week celebrations as part of ‘Azadi Ka Amrit Mahotsav’ in Mumbai on Friday.
He added that “on all issues, there is a constant engagement between the government and the Reserve Bank, including cryptocurrency issues”. “Let’s wait for the discussion paper.”
Economic Affairs Secretary Ajay Seth said last month that inputs from various stakeholders and institutions, including the World Bank and the IMF, have been included in a consultation paper on cryptocurrencies that will be released soon.
crypto market
The crypto market has wiped out nearly 60 percent of its value from its peak at the end of 2021. Currently, the total crypto market cap has fallen from $3 trillion to $1.2 trillion, due to a number of factors such as heavy selling driven by inflation concerns, policy tightening and the Terra-Luna debacle that alone eroded $40 billion.
Bitsair exchange founder Kunal Jagdale said the pain in altcoins is severe that has thrown up 85 percent of investors’ wealth. Bitcoin and Ethereum are trading around 55 to 60 percent lower than their all-time highs. “It is time to avoid any risky positions and investors should protect their capital.”
Currently, crypto and other virtual digital assets are unregulated in India. In the Union Budget presented earlier this year, Finance Minister Nirmala Sitharaman had introduced a flat 30 per cent tax on cryptocurrencies and related assets such as non-fungible tokens (NFTs) and one per cent tax deducted at source (TDS). when such a transaction occurs.
According to an estimate, there are around 15 to 20 million crypto investors in India, with a total crypto holding of around USD 5.34 billion. There is no official data available on the size of the Indian crypto market.
Read more: India finalizing consultation paper on cryptocurrency: Economic Affairs Secretary