The Reserve Bank of India (RBI) reiterated to India’s parliamentary Standing Committee on Finance on Thursday that it opposes legalizing virtual digital assets (VDAs), including cryptocurrencies, arguing they pose risks to emerging economies. According to Foresight News, the comments were reported by the Economic Times and marked the first time the RBI directly presented its views on cryptocurrencies to the committee, which met the same day to discuss “Study of Virtual Digital Assets and Future Path.”
RBI officials said VDAs should not be granted legal status at this stage, citing concerns that such assets could be used for illegal activities including terrorist financing and drug trafficking, and noting the difficulty of regulating related offshore entities. Another report said the RBI favors a containment approach leaning toward prohibition to protect banks and regulated financial institutions from risks associated with the asset class.
The RBI also criticized stablecoins pegged to fiat currencies such as the U.S. dollar, saying they could weaken national monetary sovereignty. It advocated that users instead use the central bank’s own central bank digital currency (CBDC) for virtual asset transactions.
After the meeting, committee chair Bhartruhari Mahtab told media that the RBI opposes legalizing VDAs in India. He added that compared with other digital assets, the RBI’s own digital currency, the e-rupee, is “not a booming asset,” with about 10 million users, representing 0.42% of India’s population, and that adoption has been limited amid the dominance of the Unified Payments Interface (UPI), which processes more than 300 million transactions per day on average.
The committee also heard views from the Institute of Chartered Accountants of India (ICAI), which supported establishing a comprehensive legal framework for VDAs. The RBI further questioned long-standing claims that India is among the world’s largest crypto adoption countries, arguing that methodologies used by private blockchain analytics firms may be flawed and could overestimate adoption rates in more populous countries.
Catherine
