RBI Warns Against “Dollarization” Of Indian Economy Due To Cryptocurrencies

RBI Warns Against “Dollarization” Of Indian Economy Due To Cryptocurrencies

Reserve Bank of India (RBI) officials have again warned against adopting cryptocurrencieswhich, as they say, will end up causing the “dollarization” of the local economy.

According to a Monday report by the Economic Times India WG – citing unnamed sources – RBI concerns center on US dollar-dominated cryptocurrencies taking market share from Indian rupee.

The publication notes that RBI officials, along with their Governor Shaktikanta Das, briefed the Parliamentary Standing Committee on Finance this week. In her, adopted a very skeptical stance regarding the possible influence of cryptocurrencies in the financial system. An unnamed official is quoted as saying:

“Almost all cryptocurrencies are denominated in dollars and are issued by foreign private entities, which may eventually lead to the dollarization of a part of our economy, which will go against the sovereign interest of the country.”

“This [las criptomonedas] will seriously undermine the RBI’s ability to determine monetary policy and regulate the country’s monetary system,” he added..

People say that The RBI has been particularly upset by the idea of ​​crypto being used in cross-border transfers instead of the rupee.and the common narratives against cryptocurrencies were also highlighted again: the financing of terrorism, money laundering and drug trafficking.

This is the second time this month that the RBI has voiced anti-crypto actionto which Coinbase CEO Brian Armstrong suggested last week that the exchange’s abrupt halt of its United Payments Interface (UPI) in India was due to pressure from the RBI.

“So a few days after launch, we ended up disabling UPI due to some informal pressure from the Reserve Bank of India (RBI), which is kind of the equivalent of the Treasury there,” he said, adding that they’re basically applying “gentle pressure behind the scenes to try to disable some of these payments that might be going through UPI”.

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It seems that the Indian government is also not looking favorably on digital assets latelyand instead has taken a relatively stifling approach to cryptocurrencies since outlining intentions to regulate the sector in December.

On April 1, the government implemented a 30% tax on digital asset holdings and transfers, along with other strict tax guidelines that were based on gambling and lottery ticket tax rules.. Within ten days of the laws coming into effect, trading volume on India’s top cryptocurrency exchanges dropped by as much as 70%.

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