At a time when digital currencies are being increasingly leveraged for online transactions, the RBI has issued a warning cautioning about the potential risks of cryptocurrency.
In its recently published Financial Stability Report, RBI has clearly stated that crypto is highly susceptible to fraud alongside being detrimental to consumer protection. The Central bank of India even went to the extent of stating that crypto can render anti-money-laundering measures ineffective.
Since India is an emerging market economy (EME), free and easy crypto accessibility can prove to be a bane to the country’s capital regulation framework. The RBI emphasized that the virtual currency ecosystem is paving the way for private wallets and crypto tumblers that can reduce transparency in financial flows.
RBI’s report was not solely limited to the possible harms of crypto. It also threw light on the anonymous nature of transactions in the DeFi space, which can open doors to market manipulation and illicit activities.
Central Bank’s Long-Standing Aversion To Crypto Investments
RBI has long been averse to cryptocurrency investments, holding the view that it is extremely dangerous for the economic health of the country. According to the country’s central bank, the risks associated with cryptocurrency far outweigh the benefits like cost-effectiveness, fast transfers, etc.
Owing to serious concerns over financial stability and anonymity of transactions on foreign exchanges, RBI is in complete favor of banning cryptocurrency in India. Crypto enthusiasts in the country are waiting for all possible updates in favor of crypto.