The Reserve Bank of India has said its stance on digital assets remains the same, despite the recent Supreme Court directive. According to the RBI governor Sanjay Malhotra, there is no new development even despite the court’s pronouncement.
The RBI governor touched on this subject and many others at a post-policy press briefing. He added that the Indian premier institution has always maintained its stance concerning the assets, which has remained consistent over the years. Malhotra mentioned that while the issue is currently being looked into by a government committee, the bank is still concerned about the potential risks.
“RBI has maintained a consistent stance on this issue. A govt committee is currently examining the matter. We remain concerned about the potential risks crypto poses to financial instability and monetary policy,” Malhotra said at the press briefing.
Supreme Court calls out crypto regulation delay
The recent update is coming after a recent statement by the Supreme Court of India, calling out the lack of regulation in the country. The court expressed frustrations over the continued delays in establishing a crypto regulatory framework in the country, describing Bitcoin trading as a complex form of hawala, which refers to an informal method of transferring money.
Coincidentally, the remarks were made by Justices Surya Kant and N Kotiswar Singh in a bail hearing for Shailesh Babulal Bhatt, who was arrested for trading Bitcoin illegally. The judges mentioned at the bail hearing that the court had requested clarification concerning its virtual asset policy from the government, citing a case two years before. It added that there had been no follow-up on the case since then.
During the verdict, Justice Kant noted that maintaining a set of rules and regulations in the crypto industry would have helped people avoid legal issues caused by the use of the assets. He added that he did not have any knowledge of Bitcoin or other digital assets–comparing Bitcoin trading to a complex version of the Hawala system.
Reserve Bank of India plans to roll out crypto regulations
India has been an interesting location when it comes to digital assets and its regulation. While there has been no clear-cut regulation to this effect, the country has deployed a very high tax on crypto transactions as a means to deal with its spread. Presently, India charges traders up to 30% in taxes on profit from trading digital assets including another 1% TDS on transactions exceeding defined limits.
The lack of clarity has also hindered much of the crypto industry in India from growing as people are still skeptical due to the activities of bad actors in the sector. For instance, over the last few months, there has been an increase in the amount of theft related to the crypto industry in India. In some other cases, there have been kidnappings and other vices, showing the need to deploy crypto regulations in the country.
While crypto trading has been deemed legal since the Supreme Court halted the 2018 directive of the RBI restricting banking services for crypto firms, individuals are still criminally prosecuted for trading Bitcoin. Meanwhile, the bank has also rolled out a new framework for regulation in the country. According to the RBI, the regulatory framework will rely on three pillars, including public consultations with stakeholders, impact analysis, which will include qualitative assessments, and regular review of regulations to keep pace with evolving conditions in the sector.
Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
