The Reserve Bank of India (RBI) is worried that cryptocurrencies in Asia's third-largest economy may have an impact on financial stability. RBI Governor Shaktikanta Das said in an interview with CNBC TV-18 that these big issues have been expressed to the administration.
The government of Prime Minister Narendra Modi is proposing to ban all private cryptocurrencies in the country and to create a structure for an official digital currency. The banning proposal comes at a time when many cryptocurrencies, including Bitcoin and Dogecoin, have seen a significant rise in their value.
After digital currencies were used for fraud, the RBI barred banks and other regulated entities from funding crypto transactions in 2018. But last year, in response to an appeal by crypto-currency exchanges, the Supreme Court cut the curbs.
Speaking about cryptocurrencies, Das said there are advantages of blockchain technology, but, "there are some major concerns on the cryptocurrency that we have conveyed to the government."
Das stated that the RBI is working on procedural issues to introduce the country's digital currency soon, but that date has not yet been finalized. India is not the first nation to consider releasing its own cryptocurrency as a possibility. Nations such as Ecuador, China, Singapore, Tunisia, Venezuela and Senegal have released cryptocurrencies of their own.
"We will not prematurely pull out liquidity to stifle growth. The Central Bank has many known and unknown tools to deal with liquidity situations. RBI will ensure the availability of ample liquidity," Das said in an exclusive interview with CNBC-TV18.
After surging to a record high over the weekend, Bitcoin prices saw a huge slump this week. The cryptocurrency fell below $50000, but losses went down to 8% later. Elon Musk tweet on the biggest crypto that Bitcoin has grown too far weighed on the price.
The government of India has been working to find ways to protect investors and find a feasible alternative.