Indian Finance Minister Echoes Central Bank's Crypto Ban Call but Says Global Collaboration Is Required

Indian Finance Minister Nirmala Sitharaman has reiterated the stance of India's central bank, Reserve Bank of India (RBI), to ban cryptocurrencies but said that no legislation is possible without significant international collaboration.

• The written statement was in response to five written questions from Thirumaavalavan Thol, a member of Parliament. The questions included whether the RBI had issued any notice restricting the use of cryptocurrency in India during the last 10 years, and whether the government has any plan to legislate any law restricting the use of cryptocurrency in India.
• Sitharaman said, "RBI is of the view that cryptocurrencies should be prohibited." The RBI's stance on crypto has remain unchanged for some time now. On Feb. 14, 2022, T Rabi Shankar, the deputy governor of India’s central bank, said that “banning cryptocurrency is perhaps the most advisable choice open to India.”
• "RBI has recommended for framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited. Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. 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," the finance minister said.
• The question is among the first crypto-related queries in Parliament after reports that the RBI is responsible for a "shadow ban" on cryptocurrencies after payment processors cut off crypto exchanges. The question read, "whether the Reserve Bank of India (RBI) has issued instructions, circulars, directions, warnings etc. regarding restricting the issuance, buying, selling, holding and circulation of Cryptocurrency in India during the last ten years and if so, the details thereof?"
• Apart from the known circular of April 6, 2018, prohibiting RBI's regulated entities from dealing in virtual currencies (later set aside by India's Supreme Court) the answer to question 1 does not reveal any new circular prohibiting the use of cryptocurrencies.
• In May, Ajay Seth, a senior government official, had indicated a similar position when addressing questions about India possibly banning cryptocurrency by saying "whatever we do, even if we go to the extreme form, the countries that have chosen to prohibit, they can't succeed unless there is a global consensus."