Reserve Bank of India Governor Shaktikanta Das has once again cautioned cryptocurrency investors and reiterated that these virtual currencies may pose a risk to financial stability.
“It's my duty to inform investors in cryptocurrencies. Investors must remember that they are doing so at their own risk,” Das said during a press meet after the monetary policy announcement. “Investors must remember that cryptocurrency does not have any underlying, not even a tulip.”
Private cryptocurrencies, he said, will undermine the RBI's financial stability mandate.
Such tokens aren't legal in India as the government is yet to come out with adequate legislation. Union Finance Minister Nirmala Sitharaman in her Budget 2022 speech said earnings from buying or selling cryptocurrencies and other virtual assets would be taxed at 30% from next year. However, a broader review of legislation on cryptocurrencies is pending.
Das On CBDC
In the budget, Finance Minister Sitharaman said the RBI will introduce a central bank-backed digital currency this year.
Das said he would not commit to any timelines for the launch of a central bank digital currency, barring what was announced by the government.
“We cannot introduce the CBDC in haste. There are plenty of risks, including cybersecurity risks, which we have to be mindful of,” Das said.
According to T Rabi Sankar, deputy governor at the RBI, the central bank has been working on a CBDC for the last 18-24 months. Next year, it will test out design features and other aspects of the CBDC, before launching it in the public domain.
Unlike private cryptocurrencies, a CBDC is issued by the central bank and is another form of fiat currency.
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