Standalone effort to regulate cryptos won't be effective, says FM Nirmala Sitharaman

The comments from the FM is significant amid speculations of a stringent crypto regulation in India. Despite strong opposition from the Reserve Bank of India (RBI) on permitting Crypto currencies to operate in the country, the Government has not moved on crypto regulations yet.

In 2018, the RBI banned all banks from dealing in cryptocurrencies. The Supreme Court, however, overturned the ban on a plea by the Internet and Mobile Association of India.

The SC said while the RBI had the power to regulate virtual currencies, in the absence of any legislation, the business of dealing in these currencies ought to be treated as a legitimate trade that is protected by the fundamental right to carry on any occupation, trade or business under Article 19(1)(g) of the Constitution.

In January this year, the RBI governor Shaktikanta Das reiterated his call for an outright ban on cryptocurrencies, saying these are nothing but gambling and their perceived value is nothing but make-believe.

Speaking at an event, Das reiterated the need for an outright ban on cryptos saying though those supporting it call it an asset or a financial product, there is no underlying value in it not even a tulip (alluding to the Dutch tulip mania blow-up in the early part of the past century).

"Every asset, every financial product has to have some underlying (value) but in the case of crypto there is no underlying not even a tulip and the increase in the market price of cryptos, is based on make-believe," Das said.

"So anything without any underlying, whose value is dependent entirely on make-believe, is nothing but 100 per cent speculation or to put it very bluntly, it is gambling," the governor added.