Cryptocurrencies in India are still unregulated, with no official structure in place. Despite this uncertainty, the Reserve Bank of India expressed concern about the risks associated with digital assets. RBI Governor Sanjay Malhotra issued a warning, saying the central bank is still closely monitoring cryptocurrency as a possible threat.
Following the monetary policy announcement, RBI Governor Sanjay Malhotra said during a media interaction that while there has been no new development on cryptocurrencies, a government-appointed committee is currently handling the issue. According to a PTI, he says that the central bank is still worried about cryptocurrencies since they can damage financial stability and interfere with the application of monetary policy.
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SC Seeks Clarity on Crypto Rules
In May, the Supreme Court was concerned about India's lack of clear cryptocurrency regulations. The justices questioned why the government has not yet implemented a clear framework and cautioned that an unregulated cryptocurrency market could harm the economy. They also stated that Bitcoin trading in India appears to be a type of hawala business, requiring suitable regulation to oversee such transactions.
India is also preparing a discussion paper on cryptocurrencies. An interministerial group (IMG), which includes officials from the RBI, SEBI, and the Finance Ministry, is reviewing global standards to help develop a suitable regulatory framework for the country.
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As there is no explicit law governing cryptocurrencies in India, they are not considered illegal. In 2022, the government imposed a flat 30 per cent tax on gains from virtual digital assets. However, this does not make them legal tender, and the broader regulatory framework is still evolving.
Edul Patel, co-founder and CEO of Mudrex, provides a balanced perspective on the RBI's concerns and the path forward.
He says: "India is still in the early phases of implementing cryptocurrency laws, so the RBI's concerns are acceptable. While Bitcoin can be risky if misunderstood, it also has enormous potential. The real opportunity is in developing a regulatory framework that promotes innovation while maintaining financial stability."
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Vedang, the founder of Hashtag Web3, highlighted the significance of caution for investors in the current environment.
He says: "With the RBI's ongoing caution and the absence of clear regulations, crypto investors in India must act responsibly and remain compliant with existing laws. While financial stability is the central bank's top priority, the government's multi-agency approach permits careful consideration of digital innovation."
