India's central bank calls for cryptocurrency ban
- Reference: 1658205133
- News link: https://www.theregister.co.uk/2022/07/19/india_cryptocurrency_ban/
- Source link:
The Bank's position emerged in an answer to a question on notice, delivered on Monday by finance minister Nirmala Sitharaman.
"In view of the concerns expressed by RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, RBI has recommended for framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited," Sitharaman [1]declared . [PDF]
[2]
The Bank has previously shared its dislike for cryptocurrencies, [3]labelling them a "clear danger" and "designed to bypass the financial system and all its controls, including Anti Money Laundering (AML)/Combatting the Financial Terrorism (CFT) and Know Your Customer (KYC) regulations."
[4]
[5]
RBI has developed a habit of issuing public notices warning users, holders and traders of the potential risks related with virtual currencies – which it believes range from security to operation, economic, legal and more. In April 2018, the regulatory body prohibited its regulated entities from dealing in virtual currencies or facilitating trades in the digi-dollars.
[6]Central bank: Crypto 'derives value based on make believe', threatens financial stability
[7]Retail investors should not invest in crypto, says Singapore deputy PM
[8]India's Internet Association ends crypto advocacy to do something more productive
[9]Crypto miners aren't honest about power use – time for a crackdown
According to Sitharaman, RBI does not view cryptocurrencies as currencies at all, as they are not issued by the central bank or government.
"The value of fiat currencies is anchored by monetary policy and their status as legal tender, however the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored, so it will have a destabilizing effect on the monetary and fiscal stability of a country," explained the minister.
Also of concern is the borderless nature of cryptocurrencies. Any legislation, regulation or banning of the alterna-cash would require "significant international collaboration" on both risk evaluations and the establishment of standards.
[10]
Such global efforts are underway. International financial body the Financial Stability Board (FSB) last week [11]announced its intent to develop cryptocurrency rules. The FSB, of which India is a member, said it "will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets."
The RBI's opinion came after India's Internet and Mobile Association of India (IAMAI) last week [12]disbanded its crypto advocacy committee in favor of working on India's central bank digital currency – an effort it feels will be more impactful.
India's enormous population means a crypto ban would deprive blockheads of a colossal market, and also dent the nation's cherished startup and fintech communities. Those sectors may well asked to wear some pain in the name of the financial stability of their host economy. ®
Get our [13]Tech Resources
[1] http://164.100.24.220/loksabhaquestions/annex/179/AS10.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YtaAwruCstVctrFEBdWwLAAAAEw&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.theregister.com/2022/07/01/indian_reserve_bank_cryptocurrency_risks/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YtaAwruCstVctrFEBdWwLAAAAEw&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YtaAwruCstVctrFEBdWwLAAAAEw&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2022/07/01/indian_reserve_bank_cryptocurrency_risks/
[7] https://www.theregister.com/2022/05/31/retail_investors_should_not_engage/
[8] https://www.theregister.com/2022/07/18/indias_internet_association_quits_cryptoboosting/
[9] https://www.theregister.com/2022/07/18/cryptomining_crackdown/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YtaAwruCstVctrFEBdWwLAAAAEw&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2022/07/12/fsb_crypto_regulation_soon/
[12] https://www.theregister.com/2022/07/18/indias_internet_association_quits_cryptoboosting/
[13] https://whitepapers.theregister.com/
" There is no money there. The claimed value it has, is the value you were dumb enough to pay for it, and that money is now in luxury goods in some conman's new villa. "
How is that different from the fiat currencies used the world over? There is no gold standard anymore. Currencies are pegged to fresh air and good will. Not all that dissimilar to crypto...
Look up "legal tender".
If I owe you $1000, and I give you 10 (genuine, central bank issue) $100 notes, my debt to you is paid. You can't demand some other form of payment and get a court to enforce it. If you can't handle the cash, that's entirely your problem.
(There is a grey area around contracts that stipulate a specific method of payment, but that's contract law, which is always stupid.)
The bank takes cash. Your utility providers take it. The tax office takes it. You want to clear a debt, cash works. Always.
Crypto - doesn't.
That's a simplified way of looking at it.
What happens when the UK doesn't accept that the US's $1000 is worth $1000? Back during the days of the gold standard, the value of the dollar was pegged to the value of Gold. That's since been abandoned, so it's all on trust.
Which again, is no different to crypto. At least with crypto you can see the working out.
straight to the point
"India's enormous population means a crypto ban would deprive blockheads of a colossal market, and also dent the nation's cherished startup and fintech communities."
Yep, and also deprive said market of the most colossal of scams since Madoff's ...
Which is, I think, the whole point ...
Crypto is fine if you treat it as a method of payment.
It's when people start thinking it's an investment, that's when it becomes problematic.
It is no use as a payment if you have to invest to pay.
If there were no banks then crypto would be a godsend.
However, as is, it is as dangerous as global warming.
And, ignoring the hard right on the make, the science on that was settled 30++++ years ago.
Turn your Rupees into magic numbers.The seller will spend some of the Rupees buying GPUs to generate some more magic numbers, and some he'll spend on holidays and parties and property.
Underpinning crypto is *that* transaction. Behind all the swaps and coins and NFT pass throughs, that is what is happening.
There is no money there. The claimed value it has, is the value you were dumb enough to pay for it, and that money is now in luxury goods in some conman's new villa.
To cash out, you need to convince some sucker to pay more for the magic numbers than you did. You need to join the con and be a better conman than the people who convinced you to pay money for magic numbers. You need to pump and dump too, and be a smarter pump and dump-er than the conman who sold you that crap. But of course, it's *their* market, they can dump earlier than you, and your pump just helps them dump.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3267041