RBI Warns on Economy Dollarisation threat by Crypto

Reserve Bank of India (RBI) officials have warned that most crypto being denominated by the dollar, could lead to the dollarisation of the country's economy. 

The reports say that the officials stressed that dollarisation is against the country’s sovereign interest while maintaining that digital assets pose a threat to the financial stability of India.

Officials, including RBI Governor Shaktikanta Das and former Finance Minister Jayant Sinha, told the Parliamentary Standing Committee on Finance that dollarization would hinder banks' ability to formulate monetary policy.

In addition, they cited other related cryptographic flaws as reasons for their cautious approach to regulation, such as terrorism, money laundering, and the ability to fund drug trafficking. They also said that banks may struggle to keep resources to lend as most people could not afford to invest their money in cryptocurrencies instead of bank savings. 

In recent months, India has stepped up crypto-regulatory negotiations and RBI is skeptical of legalizing digital assets. Banks said financial institutions have "serious and major" concerns about digital currencies.