Opposing the legalisation of virtual digital assets (VDAs) such as cryptocurrencies in the country, the Reserve Bank of India () on Thursday informed a Parliamentary panel that these assets pose a threat to emerging economies like India and should remain prohibited.
The Parliamentary Committee’s meeting comes at a crucial time as India seeks to balance the promotion of financial innovation with the need to safeguard monetary and financial stability, ANI reported. The meeting was to review the progress of India’s Central Bank Digital Currency (), more commonly known as the digital rupee.
As the RBI strengthens its pilot initiatives for sovereign , privately issued cryptocurrencies and other VDAs pose complex regulatory, tax and enforcement issues.
What did RBI tell Parliamentary panel?
To back its argument, the central bank cited examples of and Qatar and told the Parliamentary Standing Committee on Finance, which is headed by BJP member Bhartruhari Mahtab, that Beijing and Doha are among the list of countries that have banned similar financial activities, whereas Europe has permitted VDAs in a very stringent and regulated manner, news agency PTI reported.
It also submitted that digital money could be used to carry out illegal activities, including terror funding and narcotics smuggling. It further noted that it is extremely difficult to keep a tab on offshore entities that are involved in crypto trade pose a significant challenge for regulatory authorities.
Parliamentary committee meets with RBI, ICAI execs
Parliamentary Standing Committee held a meeting with the representatives of the RBI on ‘A Study on Virtual Digital Assets (VDAs) and Way Forward’. Additionally, the committee also discussed the same with the representatives of the Institute of Chartered Accountants of India ().
ICAI informed the parliamentary committee that it backs a comprehensive legal framework governing . Following the meeting, Mahtab, while addressing the reporters, said the central bank is against legalising VDAs in the country. He also said that as per the income tax law, the committee had been auditing part of VDAs.
Speaking to ANI, Mahtab said, “This meeting was on virtual digital assets. This is the seventh meeting that we are having today. And the RBI had come, and they gave their own view relating to virtual digital assets.”
ICAI said it can help by providing a principle-based approach and guidance to improve clarity for stakeholders and boost the financial reporting and compliance frameworks around VDAs. It added, ” ICAI can undertake comprehensive research on the various forms of VDAs and analyse their economic characteristics. Based on such research, ICAI may develop detailed guidance on their recognition, measurement, presentation, and disclosure in financial statements.”
The panel also examined the need for further policy interventions to support the growth of the country’s digital financial ecosystem while protecting consumers, financial institutions and the broader economy. Elaborating further, Mahtab told ANI, “What India should do is to find a way out. In comparison to other digital assets, RBI’s digital asset is not flourishing as such,” as he referred to the slower adoption of the relative to privately issued digital assets.
(with agency inputs)