NEW DELHI: The Reserve Bank of India on Thursday clarified its stance on legalizing cryptocurrency, amid concerns that it could be a source of financing for crimes with transnational dimensions such as drug trafficking and terrorism, people familiar with the deliberations said after the central bank briefed a parliamentary committee on virtual digital assets (VDAs).The Reserve Bank of India also emphasized the difficulty of regulating VDAs, one of the lawmakers said, adding that there is a strong view that cryptocurrencies could pose particularly big problems for an emerging economy like India. He said that even more developed economies like China have banned cryptocurrencies.Asked whether the Reserve Bank of India (RBI) supports the legalization of cryptocurrencies, Standing Committee on Finance Chairman Bhartruhari Mahtap said, “No.” The RBI also views tracking offshore entities involved in VDA trading as a serious challenge for regulatory authorities, the sources added.
The central bank is a strong opponent of the legalization of crypto assets and has publicly stated its opposition. Thursday’s confirmation is seen as a firm rebuff from Governor Sanjay Malhotra, amid strong lobbying seeking to legalize VDAs.In contrast to the RBI, the Institute of Chartered Accountants of India (ICAI) said VDAs offer a range of strategic opportunities for India, if aligned with the country’s strengths in digital infrastructure, fintech innovation and global services leadership.
The sources said they called for a comprehensive VDA law providing guidance on issuance, trading and custody that would attract institutional participants and enhance investor protection.“VDAs can significantly enhance India’s position in cross-border payments and remittances. By leveraging blockchain-based systems and stablecoins, India can enable faster, cheaper and more transparent cross-border transactions, complementing existing digital payment systems like UPI,” it is believed. This could enhance India’s role as a global hub for efficient payments infrastructure, he added.With a strong base of software talent and startups, India can lead development in areas such as blockchain applications, decentralized finance technology, and smart contract platforms, sources familiar with the view of the Indian Institute of Chartered Accountants said.