New Delhi: In yet another setback for crytocurrencies in India, the Centre on Thursday reiterated that they will not be accorded the status of legal tender by any means. Union Finance Secretary T V Somanathan said: “Right now, I will only say that cryptocurrencies are not going to become a legal tender. The Indian Rupee is a legal tender, while gold and silver are not legal tenders. The rest will be decided in the bill.”
The finance ministry is assessing the entire procedure while also preparing a Cabinet note for further discussions on creating a regulatory regime for an official digital currency issued by the Reserve Bank of India (RBI) and prohibiting private cryptocurrencies.
Sources said that the Cabinet note will take into account the obscurity of cryptocurrencies and how they can be exploited by those involved in illegal activities. Top sources told India Today TV that the November 13 meeting, chaired by PM Narendra Modi, can be termed a ‘turning point’ and the tone for the coming legislation and the government’s stand on cryptocurrencies took shape in the meeting.
Sources said that the RBI report to the Centre underlined that little is known about the cryptos and they could pose a threat to the monetary sovereignty and stability of the Rupee, especially if domestic price formation gets set in virtual currencies in future.
The RBI — which in April 2018, had prohibited banks from dealing in cryptos — is said to have warned in the report that volatility of cryptos could impact the health of banks, leading to financial instability.