By Nathan Ferguson
The Indian authorities have shown opposition and antipathy toward crypto assets for a considerable period and Shaktikanta Das (the governor of the country’s central bank) had said formerly that he intends to put an outright prohibition on crypto. The cause at the back of such resentment – as per Das – is that crypto could hinder and disrupt the conventional financial system with ill practices if permitted to make progress in India or other such countries.
A Financial Crisis Could Be Caused by Crypto, Says Indian Central Bank’s Head
Most recently, while providing his opinion at the BFSI Insight Summit 2022, it was mentioned by Shaktikanta Das that the private market of digital assets can pave the way toward a likely financial crisis at the local level. The governor additionally cited the recent epic decline of the crypto exchange FTX as evidence that the industry has some inherent hazards.
Das added that dissimilar to any of the other products, their chief concern regarding crypto deals with the fact that this asset class does not possess an underlying value. As the authorities in India prepared to regulate digital assets, the governor’s words denoted the thoughts of the rest of the financial leaders and employees associated with the central bank. Their collective belief is that digital assets of private nature have no essential value.
Apart from that, they consider that this poses a hazard to economic stability at a broader level. The remarks of the financial frontrunners reverberate that the current year could be much harder for several crypto holders who are in advance under the burden of the worldwide financial catastrophe as well as the elevated local taxes.
The government of the country has been examining the industry of cryptocurrency ever since the time the technology entered the native market of India nearly a decade back. The reason behind the increased attention paid to by the financial agencies can be linked to many cases of scam transfers, pushing the central bank to put an outright prohibition on crypto in 2018.
Even though the restrictions were lifted by the country’s Supreme Court following the continuity of the ban for 2 years, the implementation of a thirty percent tax on the gains obtained from private crypto assets’ trading additionally caused an obstacle for those owning crypto. This year, the Indian crypto market’s trading volume has succumbed by a minimum of ten times as compared to its former numbers.
Indian Regulators Still Indicate Terror Funding as the Top Concern
In November, Narendra Modi – the prime minister of India – directed additional stringent and severe regulatory measures to deal with the digital assets under the private space to minimize terror funding. The prime minister proposed the view that a lot of risks are posed by Bitcoin (the chief cryptocurrency) to the country’s young minds. He added that serious threats can be caused by the virtual currency to the younger Indian population.
In the words of the PM, if these assets go to the mischief makers, the nation’s youth could get spoiled. The country’s central bank as well as the reserve banks have carried out collaboration this year and launched the digital rupee that operates on blockchain technology. The launch of this digital currency was aimed at minimizing the costs related to commercial transfers via a decreasing dependence on fiat currency.