RBI Seeks a Crypto Ban, Says Nirmala Sitharaman

The Reserve Bank of India (RBI) has advised the government to develop cryptocurrency regulations, Finance Minister Nirmala Sitharaman said in Parliament on Monday.

"In view of the concerns expressed by the RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited," the finance minister said in a written response to a question in the Lok Sabha.

She also stated that the government believes that "global collaboration" is required for any effective regulation or ban on cryptocurrency due to its borderless nature. "Therefore any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards," she emphasized.

So far, the Indian government has not made its position on cryptocurrency public. It did, however, impose a flat 30% tax on all cryptocurrency profits, which is the highest tax bracket and the same rate as lottery winnings. The government has also mandated a 1% tax deducted at source (TDS) on all cryptocurrency redemptions, even those that result in a loss.