Indian Finance Minister: crypto isn’t currency, G20 must regulate

Indian Finance Minister Nirmala Sitharaman has taken a firm stance on Bitcoin (BTC) and other digital assets, emphasizing that they cannot be considered currencies.

Sitharaman says she expects the G20 — the intergovernmental forum comprised of 19 sovereign countries, the European Union (EU), and the African Union (AU) — to draft a regulatory framework for cryptocurrencies. 

Sitharaman also highlighted that crypto assets are predominantly used for trading, speculation, and profit-making activities rather than functioning as traditional currencies issued by central banks.

Sitharaman further emphasized how cryptocurrency assets thrive on trading and speculation.

The absence of regulatory measures, Sitharaman argues, has global implications due to cryptocurrency’s potential influence on cross-border payments and illicit activities like drug trafficking or terrorism.

Sitharaman has been involved in G20 discussions to tackle the challenges presented by crypto assets, pushing for a unified global regulatory framework. 

She highlighted the importance of international collaboration in crafting robust regulations that can effectively handle the risks associated with cryptocurrencies.

RBI governor warns against crypto risks

The Indian government embraces blockchain technology but maintains reservations about cryptocurrencies due to their volatility and speculative nature.

In India, cryptocurrencies lack legal tender status, and there are currently no dedicated 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 necessity of international cooperation. 

Furthermore, the Reserve Bank of India (RBI) has adopted a cautious approach towards cryptocurrencies, highlighting the importance of regulatory caution to safeguard financial stability.

In 2022, Governor Shaktikanta Das raised concerns about the lack of underlying value in cryptocurrencies and emphasized the need to uphold financial stability amid the increasing global popularity of cryptocurrencies.

The RBI’s cautious strategy aims to safeguard India’s financial sovereignty and mitigate potential disruptions to the banking system that could result from unregulated cryptocurrency activities. 

Through issuing warnings and promoting regulatory caution, the RBI aims to maintain resilience and security within India’s financial ecosystem in response to changing digital asset environments.

Das further warned that the crypto “party” is not devoid of risks. Despite this, the RBI maintains its vigilance in tackling emerging risks and challenges, while cautiously considering the possibility of introducing a central bank digital currency (CBDC).