In order to curb the illicit exchange of cryptocurrencies which holds the potential to affect the international flow of funds within the country, the need to regulate Bitcoin and other digital currencies has become paramount. Following the same, the Reserve Bank Of India, on Friday, told the Supreme Court that its stance is one of extreme caution as it has heavy policy implications and that it needs to be regulated.
RBI spokesperson, Senior Counsel Shyam Divan told the court that a committee has been constituted to look into the issue and as such RBI will be responding to various petitions seeking such regulations in a minimum of three weeks’ time. The Committee in question is an interdisciplinary committee, set up in 2017 to analyse cryptocurrencies and suggest the regulatory framework for the same. It is currently headed by the Secretary of Economic Affairs, Subhash Garg.
The court was in session, dealing against an RBI circular banning bank transactions involving virtual money.
Senior Counsel Gopal Subramanium explained to the court that the matter at hand is serious and needed to be dealt with at the earliest. He also categorised the RBI circular that ordered all the banks to withdraw support for cryptocurrency exchanges and other businesses dealing with virtual currencies as baseless. He said, “In today’s tech world, transactions are done online and you need banks for that” and that should concern the government.
Following earlier warnings on risks involved in dealing in virtual currencies like Bitcoin, RBI had, on April 5, barred all its regulated entities including banks from dealing in the same in a bid to protect consumers from money laundering and other financial frauds. The entities had been given three months to exit any relationship wherein they provided services to any individual or business dealing in digital assets. The trade in the Indian Rupee (INR), henceforth, stopped on July 6.
“Virtual currencies, also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity, and money laundering, among others.” Nonetheless, RBI mentioned that it is in search of a fiat digital currency which would be issued by the Central Bank.