The Reserve Bank of India (RBI), according to Union Finance Minister Nirmala Sitharaman, is in favor of outlawing cryptocurrencies because it is worrying about their destabilizing impact on monetary and fiscal stability.

“In light of the issues stated by RBI on the disruptive influence of cryptocurrencies on the financial and economic stability of a country, RBI has urged for the formulation of legislation on this sector. In response to a question from the Lok Sabha on this subject, she stated in a written response that RBI believes cryptocurrency should be illegal.

The finance minister stated that only global cooperation will allow for effective regulation on this subject.  International cooperation is required to prevent systemic risk because cryptocurrencies are their nature borderless.

Therefore, any legislation for regulation or banning can only be effective after major international collaboration on assessing the risks and advantages and developing a uniform taxonomy and criteria, according to the expert.

In India, cryptocurrencies are currently unregistered, and the government is working to establish legislation to regulate them.

The RBI is concerned about cryptocurrencies due to their lack of intrinsic value and enigmatic nature. Numerous so-called crypto exchanges, most of which operate online and entice users through media advertising by guaranteeing extraordinary profits, haven’t helped the cause of cryptocurrencies in India.

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The RBI is concerned about cryptocurrencies due to their lack of intrinsic value and enigmatic nature. Numerous so-called crypto exchanges, most of which operate online and entice users through media advertising by guaranteeing extraordinary profits, haven’t helped the cause of cryptocurrencies in India.

According to her, the central bank also voiced its worries about the damaging impact of cryptocurrencies on the economy. “RBI stated that cryptocurrencies are not a form of currency since a central bank or government must issue every kind of money today.

Furthermore, the value of fiat currencies is supported by monetary policy and their legal tender status, but the value of cryptocurrencies is solely based on speculation and unfounded expectations of high returns, which will destabilize the monetary and fiscal stability of a nation, according to the expert.

Also, Read: RBI to launch blockchain technology-based digital rupee.