India’s Central Bank Is Constantly Engaged With the Government on Crypto: RBI Chief

India’s central bank is constantly engaged with the government on cryptocurrencies, the Reserve Bank of India (RBI) Governor said on Wednesday. 

“I can say that on all issues there is constant engagement between the government and the Reserve Bank, including the cryptocurrency issues. We have given our views to the government. Let’s wait for the discussion paper,” said RBI chief Shaktikanta Das, referring to the consultation paper on cryptocurrencies that a finance ministry official recently revealed is fairly ready.

Last month, while briefing a parliamentary panel on cryptocurrencies, RBI said that accepting digital assets can partly lead to the dollarization of the economy, which can be detrimental to the sovereign interest of the country. It will seriously jeopardize RBI’s ability to regulate monetary policy and cash flow into the economy, the central bank added.   

Working on Crypto Regulation

Amid a persistent and strong RBI opposition to cryptocurrencies, a top Indian finance ministry official recently revealed that the government was ready with a consultation paper, and it would be released soon. 

“The consultation paper is fairly ready. We have gone through a deep dive and consulted not just domestic stakeholders but also multilateral institutions like IMF and World Bank. We hope we’ll soon be in a position to finalize and submit it,” Ajay Seth, Economic Affairs Secretary, Ministry of Finance, said on May 31. 

Seth added that the consultation paper would be put before the general public for their comments and suggestions. It gave rise to the impression in relevant circles that the government was working on crypto regulations, and it may not be completely in sync with the RBI’s stance on the industry. 

Government, RBI on Same Page

Citing the crypto market meltdown, the RBI chief in a recent interview justified not regulating the asset class and claimed that the government’s views on the matter were more or less in sync with the central bank’s stance. 

“We have conveyed our position to the government and they will take a considered call. I think the utterances and statements coming out from the government are more or less in sync. They are also equally concerned,” the RBI chief had said in the interview.

CBDC Plans Amid Regulatory Void

The RBI is scheduled to launch its CBDC in the current financial year. At a webinar hosted by IMF, RBI’s Deputy Governor T Rabi Sankar said on June 2 that CBDCs can kill the case for cryptocurrencies, including stablecoins.

However, experts believe that digital versions of national fiat currencies can’t function optimally in a regulatory void as some of them might also be interacting with cryptocurrencies in their jurisdictions.