Discussions underway with RBI on crypto, digital currency: FM Sitharaman

Finance Minister Nirmala Sitharaman on Monday said discussions with regard to private cryptocurrencies and central bank-backed digital currency have been going on with the Reserve Bank and a decision will be taken after due deliberations.

Sitharaman, in her Budget speech on February 1, had announced that Digital Rupee or Central Bank Digital Currency (CBDC) would be issued by the RBI in the coming fiscal year. She had also announced the government will levy 30 per cent tax on gains made from any other private digital assets from April 1.

“On crypto, I have said that we are in the process of consultation. Whatever decision the government is going to take, will be after the consultation,” she said.

Replying to questions after addressing the RBI’s Central Board of Directors here on Monday, Sitharaman said the central bank and the government are on board regarding cryptocurrencies.

“I think in the last few years, you would have noticed that there is complete harmony with which we are working, respecting each other’s domain also knowing what we have to do with each other’s, you know, priorities and in the interest of the nation,” said the minister, who is schedule to address the board of capital market regulator Sebi on Tuesday.

She said the discussions with the RBI regarding the CBDC were going on prior to the Budget announcement, and they are continuing.

RBI Governor Shaktikanta Das added that like several other issues, this particular matter is internally under discussion between the RBI and the government.

“Whatever points we have, we discuss with the government,” he added.

CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies or cryptocurrency that have mushroomed over the last decade. Private virtual currencies do not represent any person’s debt or liabilities as there is no issuer.

Last week, Das had said the central bank does not want to rush and is carefully examining all aspects before introduction of the CBDC.

The Trend and Progress of Banking in India report, released by the RBI in December last year, had said that given the CBDC’s dynamic impact on macroeconomic policy making, it is necessary to adopt basic models initially, and test comprehensively so that it has minimal impact on monetary policy and the banking system.

India’s progress in payment systems will provide a useful backbone to make a state-of-the-art CBDC available to its citizens and financial institutions, it had said.

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