Amid recent surge in demand for cryptocurrencies, the Reserve Bank of India has raised concerns that the digital currency may impact financial stability in India. All major concerns related to cryptocurrencies, such as regulations, have been conveyed to the government, RBI Governor Shaktikanta Das said on Wednesday.
The central government is in process of bringing legislation that would create the ground for the introduction of an official digital currency and prohibit private cryptocurrencies. The government is planning to bring a new bill on cryptocurrencies (The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021) in the ongoing Budget session in the Parliament.
Recently Finance Minister Nirmala Sitharaman said that a high-level Inter-Ministerial Committee (IMC), on issues related to virtual currencies, has suggested prohibiting private cryptocurrencies, like Bitcoin, in India. The committee, however, pitched for introduction of an official digital currency with a status of a legal tender and appropriately regulated by the Reserve Bank of India.
In April 2018, the RBI had banned regulated financial institutions and banks from providing services to businesses dealing in the exchange/trading of cryptocurrencies. However, the Supreme Court, vide judgment dated March 4, 2020, lifted the ban. Since then, cryptocurrency has been operating in the country.
Bitcoin, the most popular cryptocurrency, delivered unmatched returns of 1,600 per cent in last one year, while its market value crosses $1 trillion for the first time. The price of bitcoin recently hit record high of $58,000 amid increased interest from long-term investors and others citing speculative buying.