Reserve Bank of India (RBI) Governor, Shaktikanta Das on September 9 said the central bank has "serious concerns" with regards to the financial stability of cryptocurrencies.
Attending an event on September 8, the RBI chief said, "We have serious, major concerns on cryptocurrency w.r.t financial stability, have conveyed the same to government of India."
This isn't the first time the RBI governor is voicing his concerns on cryptocurrency.
The central bank has conveyed the concerns on cryptocurrency to the government and it is up to the government to take a call on the matter, Das said, adding that there needs to be more clarity on the contribution of cryptocurrency to the economy.
On June 4, too, Das had repeated the critical stance on cryptocurrencies.
“We have major concerns on cryptocurrency, which we have conveyed to the government. With regard to advice to investors, well, central banks don't give any investment advice. It's up to each investor to make his own appraisal, to do his own due diligence and take a very careful call with regard to his own investments," Das said then.
Das’ latest comments are significant as the Government is in the advanced stages of finalising a national regulation on private cryptocurrencies. On August 16, Finance Minister Nirmala Sitharaman had said that the Union Cabinet was soon expected to take up a bill to regulate cryptocurrency and its growing market in India.
"Cabinet note is ready on cryptocurrency bill. I am awaiting Cabinet to clear that," Sitharaman said during an interaction with reporters.
While the RBI is critical of private cryptocurrency, it is in favour of bringing out a central bank digital currency. The RBI is presently working on this model and may announce some decisions as early as the end of this year, central bank top officials have indicated in the past.
In the past, Sitharaman has made her stance on cryptocurrency clear, saying that the government was not looking to shut all options and that people will be given adequate windows to experiment with blockchain, bitcoins and cryptocurrency.
In late July, Sitharaman had informed Rajya Sabha that the government does not collect information on the number of cryptocurrency exchanges and investors in India. She also said that the Finance Ministry has received no information on whether some of these exchanges are involved in narcotic drug trafficking or money laundering.
According to data from crypto exchanges, there are approximately 1.5 crore Indians who have invested in cryptocurrencies holding worth Rs 15,000 crore, with more and more people starting to invest. There are 350 startups that operate in the blockchain and crypto space.