India's central bank appears to want to ban cryptocurrencies, but maybe not for the reasons you think

On Thursday, the Reserve Bank of India (RBI) issued a major announcement regarding the cryptocurrency industry. While the report praised the innovative distributed ledger technology associated with digital currencies, the RBI dismissed calls to regulate such assets and called for an outright ban. The RBI’s core concern has to do with cryptocurrencies threatening the country’s financial sovereignty. RBI wrote:

“Historically, private money has led to instability, and so, over the centuries, has evolved into fiat money. You cannot regress to using private money just because technology allows it, without considering its impact on society’s laws, social and economic dislocation."

According to the Reserve Bank of India, the increased adoption of cryptocurrencies will create a danger of cryptocurrencies displacing the Indian rupee, thereby weakening the authority's control over monetary policy. Furthermore, the RBI does not appear to be buying into the argument that India should do the same, based on the relatively laissez-faire regulation of cryptocurrencies in developed countries such as the United States:

“Almost all cryptocurrencies are denominated in U.S. dollars. If cryptocurrencies replace emerging market currencies, it would give developed markets better strategic control over emerging markets.”

However, people don’t seem to be concerned about how the proposed ban will affect Indian cryptocurrency enthusiasts. While the RBI hinted that it would provide individual investors with a "reasonable exit" to avoid losses, it also said:

“People who invest in these vehicles are fully aware of the risks involved. Investors who buy these vehicles do so with their eyes wide open, at their own risk and do not need any regulatory exemption.”

India currently faces confusing regulatory requirements when it comes to cryptocurrencies. While some entities, such as the RBI, support a ban on cryptocurrencies, others, such as the Indian government, want to regulate the industry rather than issue a blanket ban.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.