Indian Finance Minister Nirmala Sitharaman Takes Firm Stand on Cryptocurrencies, Calls for G20 Regulation

Indian Finance Minister Nirmala Sitharaman has made a decisive statement regarding Bitcoin (BTC) and other digital assets, asserting that they do not qualify as currencies. She has emphasized the necessity for the G20, a forum comprising 19 sovereign nations along with the European Union (EU) and the African Union (AU), to establish a regulatory framework for cryptocurrencies.

Sitharaman underscored that cryptocurrencies are primarily utilized for trading, speculation, and profit-seeking endeavors, rather than serving as conventional currencies issued by central banks. She further accentuated the prevalence of trading and speculation within the cryptocurrency space.

The absence of regulatory measures, Sitharaman cautioned, has global ramifications, particularly concerning cryptocurrencies' potential impact on cross-border payments and their association with illicit activities such as drug trafficking and terrorism.

Sitharaman has actively participated in G20 discussions aimed at addressing the challenges posed by crypto assets, advocating for a unified global regulatory framework. She emphasized the significance of international cooperation in formulating robust regulations capable of effectively managing the risks associated with cryptocurrencies.

RBI Governor Warns Against Crypto Risks

While the Indian government embraces blockchain technology, it maintains reservations regarding cryptocurrencies due to their volatility and speculative nature. In India, cryptocurrencies do not hold legal tender status, and there are currently no specific regulations governing them.

The recent introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill underscores the government's call for global consensus on minimal cryptocurrency regulations, emphasizing the importance of international collaboration.

Furthermore, the Reserve Bank of India (RBI) has adopted a cautious approach toward cryptocurrencies, emphasizing regulatory prudence to safeguard financial stability. Governor Shaktikanta Das has raised concerns about cryptocurrencies' lack of underlying value and stressed the need to uphold financial stability amidst their increasing global popularity.

The RBI's cautious strategy aims to protect India's financial sovereignty and mitigate potential disruptions to the banking system resulting from unregulated cryptocurrency activities. Through issuing warnings and promoting regulatory caution, the RBI endeavors to maintain resilience and security within India's financial ecosystem in response to evolving digital asset landscapes.

Das cautioned that the crypto "party" is not without risks. Nonetheless, the RBI remains vigilant in addressing emerging risks and challenges while carefully considering the possibility of introducing a central bank digital currency (CBDC).