Cryptocurrencies a threat to financial stability: RBI Governor Shaktikanta Das

“As far as cryptocurrencies are concerned, the RBI stance is very clear. Private cryptocurrencies are a big threat to our financial and macroeconomic stability. They will undermine RBI’s ability to deal with issues related to financial stability. I think it is my duty to tell investors that when they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset)… not even a tulip,” said Das in a press conference following the policy rate decision.

Dasss comments come as yet another blow to the crypto industry which had been reeling from the new tax imposed by Union Finance Minister Nirmala Sitharaman in the budget. She had proposed a 30 per cent tax on private cryptocurrencies and non-fungible tokens. Additionally, tax deducted at source (TDS) of one per cent is to be levied on every digital asset transaction.

Das declined to give a timeline for its introduction of CBDC. “We can’t give a timeline on CBDC. But what I can say is that whatever we are doing, we are doing it very carefully and cautiously. We have to keep risks like cyber-security and counterfeiting in mind. So, we are proceeding cautiously and can’t give a timeline,” Das said.

The RBI Governor also said that work on both wholesale and retail models of the central bank digital currency (CBDC) was ongoing. “Which model is tested first will be decided later,” he said. “We are not working with any external agencies when it comes to the CBDC. We are working with the CBDCs in our ecosystem. Any decision to engage with any other agencies will be taken later. We are open to trying out all possible technologies for CBDC. It depends on the use case. So, it won’t be one or the other,” he said.

In her budget speech, Sitharaman had also said that the RBI will introduce a digital rupee in the next financial year. That will also require an amendment of the RBI Act to include digital currency issued by the central bank under the definition of a bank note.

“Digital rupee will be exactly like normal, physical rupee,” said RBI Deputy Governor T Rabi Sankar. “Work on Central Bank Digital Currency is ongoing. Once the law, as proposed, is amended, we can go ahead with our proofs of concept and pilot projects,” he said.