On Thursday, the Reserve Bank of India, or RBI, the country’s central bank, issued an important circular regarding the cryptocurrency industry. While the report commends the innovative distributed ledger technology associated with digital currencies, the Reserve Bank of India dismissed arguments in favor of regulating such assets and called for an outright ban. The main concerns of the Reserve Bank of India were related to cryptocurrencies, which threaten the economic sovereignty of the country. RBI wrote:

“Historically, private currencies have led to volatility and thus have been turned into fiat currencies over the centuries. The step back to private currencies cannot be made just because technology allows it, without taking into account the disintegration it causes in the legal, social and economic structure.”
According to the Reserve Bank of India, the rise in the use of cryptocurrencies will lead to the risk that cryptocurrencies will replace the Indian rupee, undermining the authorities’ control over monetary policy. Also, the Reserve Bank of India (RBI) does not appear to be convinced by the case for RBI regulation in developed countries such as the US as a reason for India to do the same:

“Almost all cryptocurrencies are valued in dollars. If cryptocurrencies replace emerging market currencies, it will give developed markets better strategic control over emerging markets.”
However, few seem to be worried about how this proposed ban will affect daily Indian crypto enthusiasts. While the Reserve Bank of India (RBI) suggested that individual investors be given a “reasonable exit” to ensure they don’t lose money, it also said:

“People who have invested in these tools are fully aware of the risks involved. Investors who have purchased these instruments have done so with their eyes open, at their own risk, and are not guaranteed any exemption from regulatory requirements.”

Source: CoinTelegraph