On Monday, Union Finance Minister Nirmala Sitharaman told the Lok Sabha that the Reserve Bank of India supports the prohibition of cryptocurrencies. She was responding to an unstarred question from VCK MP Thol Thirumaavalavan, who wanted to know if the RBI had expressed concern about the negative impact of cryptocurrency on the Indian economy. He also asked Sitharaman to clarify whether it had recommended enacting appropriate legislation to regulate the flow of cryptocurrency in India, as well as the Centre’s position on the matter.
Nirmala Sitharaman emphasised, “The Reserve Bank of India has expressed concern about the negative impact of cryptocurrency on the Indian economy. Because every modern currency must be issued by the Central Bank / Government, the RBI stated that cryptocurrencies are not a currency. Furthermore, the value of fiat currencies is anchored by monetary policy and their legal tender status, whereas the value of cryptocurrencies is solely based on speculation and expectations of high returns, which are not well anchored, and thus have a destabilising effect on a country’s monetary and fiscal stability.”