New Delhi: RBI Governor Shaktikanta Das on Wednesday raised an alarm over cryptocurrencies' rising craze in India's retail investors. "Cryptocurrencies are a very serious concern for the central bank. The concerns are primarily stemming from a macroeconomic and financial stability perspective", Das said in an interview with Business Standard. On March 4, 2020, a three-judge bench of the Supreme Court had quashed the ban that the RBI had imposed on trading in cryptocurrencies like Bitcoin in April 2018. Since then the craze of trading in virtual currencies has grown multifold.
Das said that the RBI has conveyed its “serious and major concerns” over virtual currencies (VCs) to the government. However, the union government has not yet enacted a law on cryptocurrencies and is still in consultation with industry experts, comments from various officials and ministers.
“Banks, as well as other entities, addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002, in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances,” RBI had said in a circular issued in September 2021 asking banks to stay alert over cryptocurrency dealings.
In the interview, Das said that he has felt that the number of participants who are said to be investing in cryptocurrencies may be exaggerated. “Perhaps there is an effort to enrol as many people as possible,” he said.
According to Bloomberg News, the total value of all cryptocurrency assets has just exceeded $3 trillion.
Further, commenting on the state of the Indian economy, Shaktikanta Das said he sees a very positive outlook as far as India's growth is concerned, even as there is Covid uncertainty. Shaktikanta Das further said the market evolution of interest rate seems to be quite orderly while expressing confidence that adequate forex reserves will be given a cushion to deal with volatility.
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