Nirmala Sitharaman, Union Finance Minister

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New Delhi: Union Finance Minister Nirmala Sitharaman has said that any legislation to regulate or ban cryptocurrencies can only be effective after significant international collaboration on risk-benefit assessment.

“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage,” Sitharaman said in a written response to Lok Sabha.

As to whether RBI has expressed concern about the adverse effects of cryptocurrency on the Indian economy, she said that RBI has mentioned that cryptocurrencies are not a currency as every modern currency has to be issued by the central bank or the government.

“Furthermore, the value of fiat currencies is anchored by monetary policy and their status as legal tender, however, the value of cryptocurrencies is based solely on speculation and expectations of high returns which are not well anchored, so this will have a destabilizing effect on the monetary and fiscal stability of a country,” she added.

In view of the concerns expressed by the RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, the central bank has recommended drafting legislation on this sector and is of the opinion that cryptocurrencies currencies should be banned.

India’s central bank’s RBI Governor Shaktikanta Das recently said that cryptocurrencies are a clear danger and anything that derives value on the basis of pretense without any underlying , is just speculation under a fancy name.

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