RBI warns of the risks of private cryptocurrencies.

India’s central bank, the Reserve Bank of India (RBI), recently released its financial stability report, in which it spoke out against privately held cryptocurrencies.


Indian central bank releases report

The central bank claimed it poses a threat to consumer protection, money laundering and the fight against terrorist financing. In addition, the bank also resumed its long-standing argument against crypto regarding its long-term risks. In this regard, it concerns capital flow management, financial and macroeconomic stability, monetary policy transmission and currency substitution. The report states the following:

“Private cryptocurrencies pose direct risks to consumer protection and the fight against money laundering and the fight against terrorist financing. They are also prone to fraud and extreme price volatility, given their highly speculative nature. Longer-term concerns relate to capital management, financial and macroeconomic stability, monetary policy transmission and currency substitution.”


RBI on the risks of crypto

The report also highlighted concerns about the global proliferation of privately held cryptocurrencies. This has led to sensitization of regulators and governments to the associated risks. RBI referred to the data from the Financial Action Task Force (FATF). This organization confirms the rise of crypto currencies with features to enhance anonymity. The Central Bank claimed that this increase in financial anonymity could harm the country’s economy.

“According to the Financial Action Task Force (FATF)12, the virtual asset ecosystem is seeing an increase in anonymous cryptocurrencies (AECs), decentralized platforms and exchanges, privacy wallets and other types of products. In addition, it sees an increase in services that enable or permit reduced transparency and greater misappropriation of financial flows.”

It is not the first time that the RBI has defended itself against the use of crypto. Earlier this month, the market speculated that the RBI would come out with a ban on crypto in India. In the meeting of the Central Governing Council of the Reserve Bank of India, it was claimed that the RBI presented the long-term financial stability concerns that come with crypto. However, it was never confirmed whether these speculations were facts. However, the intent of the RBI for crypto in India seems quite clear to many.

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