Cryptocurrencies Pose Threat To India, Should Not Be Legalised: RBI To Parliamentary Panel

New Delhi, Jul 3 (KNN) The Reserve Bank of India (RBI) has told a parliamentary standing committee that virtual digital assets (VDAs) such as cryptocurrencies pose a threat to an emerging economy like India and should not be legalised in the country at this stage, sources aware of the deliberations said.

The committee met representatives of the RBI and the Institute of Chartered Accountants of India (ICAI) to discuss “A Study on Virtual Digital Assets (VDAs) and the Way Forward.”

The RBI made its submission before the Parliamentary Standing Committee on Finance, chaired by BJP member Bhartruhari Mahtab, PTI reported.

The central bank told the committee that digital money could be used for illegal activities including terror financing and narcotics smuggling, and that it was very difficult to monitor offshore entities involved in cryptocurrency trading — posing significant challenges for regulatory authorities. 

The RBI noted that countries such as China and Qatar have banned such financial activities outright, while Europe has permitted virtual digital assets only under a stringent regulatory framework.

Mahtab told reporters after the meeting that the RBI was opposed to legalising virtual digital assets in India. He also noted that the committee had been auditing aspects of VDAs under income tax law, according to PTI.

The ICAI, by contrast, conveyed its support for a comprehensive legal framework governing VDAs. 

The accounting body said it could assist by providing a principles-based approach and guidance to strengthen financial reporting and compliance frameworks related to VDAs, and offered to undertake detailed research on the recognition, measurement, presentation, and disclosure of various forms of virtual digital assets in financial statements.

(KNN Bureau)