Despite calling for a cryptocurrency ban, the Reserve Bank of India recently said that one of its key focuses is to create a regulatory framework that would include the possibility of banning unbacked crypto assets, stablecoins, and DeFi ( Decentralized Finance). However, industry experts believe that at this stage, cryptocurrencies cannot be an alternative to fiat payments in India. โThe RBI has made it clear in different forums that it does not intend to recognize cryptocurrencies as legal tender in India. Lately, we may see the central bank's stance harden on DeFi as well (where cryptocurrencies act as financial assets and not money) citing macroeconomic risks,โ Purushotham Kittane, technology attorney, Nishith Desai Associates, a law firm, told FE Blockchain, adding that compensation mechanisms involving cryptocurrencies have been taken and will continue to be carried out in accordance with the existing legal framework.
By which it is understood, โUnder India's G20 chairmanship, the RBI has to consider the macroeconomic and regulatory outlook to address the full range of risks posed by cryptocurrency assets,โ according to the insights of its report titled Report of Financial stability. Interestingly, last week the cryptocurrency market saw an increase of around $29.95 billion, reflecting an increase of 3.18%. This increase is expected to be driven by the burgeoning DeFi sector, which accounts for around $2.55 billion or 8.52% of the volume in the cryptocurrency market.
Industry experts hope that all three policy responsesโban, contain, or regulateโcan address the risks posed to consumers, investors, market integrity, and financial stability in the cryptocurrency market. โThe government has taken a hands-on approach to cryptocurrencies. Additionally, India added cryptocurrencies to the Prevention of Money Laundering Act (PMLA), where cryptocurrency companies must register and comply with anti-money laundering and anti-terrorist financing laws. Therefore, it is believed that the government is taking steps to regulate cryptocurrencies, which could stabilize the cryptocurrency market,โ explained Rajagopal Menon, vice president of WazirX, a cryptocurrency exchange.
Despite the ambiguity and ongoing fighting, the industry is optimistic that somewhere or someday the regulator will blink. โFuture aspects such as the introduction of cryptocurrency-based salaries can be expected. This could have the ability to simplify payments and offer financial autonomy, depending on the existence of supporting regulatory structures,โ concluded Edul Patel, CEO and co-founder of Mudrex, a global cryptocurrency investment platform.
