As cryptocurrencies grow in popularity and gain more mainstream acceptance, RBI (Reserve bank of India) must better understand digital currencies to regulate it effectively. The new technology uses blockchain, a distributed ledger, allowing users to copy and
share digital data without interference from a central authority. The benefits of cryptocurrency are numerous, including the ability to batch-process micropayments and KYC authentication. But as cryptocurrency continues to evolve, RBI must better understand cryptocurrency before deciding how to respond.
The RBI needs to understand the technology before regulating it fully. However, this new directive has already paved the way for banks to understand cryptocurrency better. The clarification is an encouraging step forward and comes when India is looking to expand its financial inclusion. While the RBI has not found any concrete evidence that crypto exchanges have caused harm to regulated financial institutions, it has prevented the growth of these services.
Why Should RBI Understand Crypto
The RBI has clarified its position on cryptocurrency and regulation. The move could lead to increased cooperation between banks and crypto exchanges and more deposit and payment options. Ultimately, this move will help Indian businesses.
The regulatory framework surrounding cryptocurrencies will help keep the country safe and secure, and the industry’s growth is inevitable. With this new guidance, the RBI has taken the right steps to help make the industry safer.
While cryptocurrency has been around for a while, it is still relatively new in many countries, and many people believe it to be a way for people to conduct illegal practices. Despite this, in late 2018, the RBI banned the use of digital currencies in India because it could not understand it enough. However, since the Supreme Court has lifted the ban on crypto exchanges, the RBI has made a correct decision.
The Reserve Bank of India has taken a positive stance on cryptocurrency. In March, it clarified its circular on cryptocurrencies, set aside by the Supreme Court in March 2020.
As of this date, the circular is not valid and cannot be cited. This action is welcome news for the cryptocurrency industry in India, and it may encourage more banks to offer services to those involved in the technology. In addition, investors who want to make their way to invest in crypto can use bitcoin trading software. This could further spur greater adoption of cryptocurrency, enabling India to achieve its goal of greater financial inclusion.
While Bitcoin and other cryptocurrencies are still in their infancy, many similarities exist between the technologies. In addition to being more secure, Bitcoin is not a security. It also provides many benefits, including the opportunity to invest in multiple cryptocurrencies at one time.
You can also use the new technology to transfer wealth, and the RBI must ensure that these are used responsibly. However, they imposed the current ban on cryptocurrencies for various reasons. Some people have made it a criminal activity. They think that cryptocurrency has become too easy to use.
While the RBI has taken a positive stance on cryptocurrency, it remains cautious. The RBI asked regulated entities to carry out customer due diligence in a recent circular. The bank has stated that the issue is not related to the economy’s safety.
It is still uncertain whether or not the RBI’s action will affect regulated entities, although it has clarified its position. But, it will take some time before it can regulate crypto exchanges.
The RBI must better understand cryptocurrency. Using it to regulate the market is illegal. It also makes it difficult for regulated entities to meet the requirements for KYC and other compliance programs.
Fortunately, there is a solution. While it’s difficult to regulate the industry, there are many ways to ensure the safety of the cryptocurrency community. As a result, the RBI must better understand how to promote the development of crypto-related services in India proactively.
Final Words
RBI isn’t completely in favor of cryptocurrency, but it is studying the option of establishing a central bank digital currency. The central bank has concerns about cryptocurrency’s impact on financial and macroeconomic stability.
In February, the Centre of Economic Analysis listed a bill proposing a crypto ban, but the bill was never introduced into parliament. The government may have softened its stance on cryptocurrency, but it’s still too early to tell.
