The Reserve Bank of India has indicated that it is of great importance to police peer-to-peer crypto trading as its ban prohibiting regulating financial firms to do business with crypto affiliated firms has led crypto traders and exchanges to seek alternative methods.
These alternative methods have led to peer-to-peer crypto trading “which may also involve increased usage of cash” and there is also the “possibility of migration of crypto exchange houses to dark pools/cash and to offshore locations, thus raising concerns on Anti Money Laundering,” reported Economic Times.
Apart from AML issues, the Reserve Bank of India also worried that peer-to-peer trading will make it hard to prevent terrorism financing through the use of virtual currencies and also brings the issue of tax evasion for those trading in digital currencies.
Therefore, peer-to-peer cryptocurrency trading “requires close watch.”
Even as India’s central bank seeks to police peer-to-peer crypto trading it has indicated that it has already set an inter-departmental unit that will look into the “desirability and feasibility” of introducing a central bank-backed digital currency.
This was revealed in its 2017-2018 annual report. The report captured that the main reason why the RBI is interested in a state-backed virtual currency is to cut the “rising cost of managing fiat paper/metallic money.”
Although the report did not record when the interdepartmental group is expected to table its findings, the RBI has noted that the “adoption of DLT [Distributed Ledger Technology] in the domain of payment, clearing, and settlement solutions holds the promise of significant economic benefits.”
With India’s Supreme Court set to have a final hearing on whether to lift, amend or stay the RBI ban next month, the RBI may choose to hasten the developments of its own virtual currency instead of allowing privately issued digital coins.
With the current twist in the trading of digital currencies in India, do you think the RBI will be appreciative of its own cryptocurrency even if the interdepartmental group approves it?
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