Updated February 16th, 2024 at 18:02 IST

RBI executive director criticises cryptocurrencies, calls for government action

The RBI's stance on cryptocurrencies aligns with its previous statements highlighting the risks associated with these digital assets.

Reported by: Business Desk
Representative | Image:Freepik
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RBI on crypto: The Reserve Bank of India (RBI) has expressed concerns over cryptocurrencies, stating that they pose systemic risks to financial systems and cannot be considered currencies due to their lack of underlying value. P Vasudevan, an executive director at the RBI, made these remarks during a panel discussion organised by IIM-Kozhikode.

"Cryptocurrencies cannot be called currencies as they don't have any underlying value," Vasudevan said. He emphasised that it is ultimately the government's responsibility to decide how to address cryptocurrencies. Currently, bitcoins, a popular cryptocurrency, have no legal backing, and investors are required to pay taxes on income earned from trading them.

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Restrictions imposed

Against the backdrop of recent actions against Paytm Payments Bank and restrictions imposed on some international card providers, Vasudevan suggested that self-regulation could better protect the fintech sector. He also mentioned the importance of implementing mechanisms to address misconduct within the industry.

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The RBI's stance on cryptocurrencies aligns with its previous statements highlighting the risks associated with these digital assets. The central bank has consistently warned investors about the speculative nature of cryptocurrencies and their potential to disrupt traditional financial systems.

As the debate around cryptocurrencies continues, regulatory authorities and governments worldwide are grappling with the challenge of balancing innovation with financial stability. The RBI's position underscores the need for a coordinated approach to address the complexities of the cryptocurrency market.

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(with PTI inputs)

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Published February 16th, 2024 at 18:02 IST