PM Modi chairs meet on cryptocurrency amid concerns over terror financing
Prime Minister Narendra Modi on Saturday chaired a meeting on the way forward for cryptocurrency amid growing concerns over its use for money-laundering and terror financing.
According to two persons familiar with the matter, at the meeting, there was a consensus that the government should not make any private digital currency, as legal tender and unregulated cryptocurrencies have exposed gullible Indians to financial risks.
“While the Reserve Bank of India (RBI) is open to using the technology behind cryptocurrencies, it is not in favour of making them legal tender as these currencies are highly volatile and a threat to the financial stability. Most of the government departments concur with RBI, but they are under pressure from various lobby groups who want a status quo. A final view will, however, be taken by the top leadership,” one of the persons cited above said on condition of anonymity.
The crucial meeting comes two days after RBI governor Shaktikanta Das sounded alarm on cryptocurrencies, cautioning investors on the potential pitfalls of the digital currencies.
The central bank has repeatedly reiterated its strong views against cryptocurrencies, saying they pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them as well as their claimed market value.
The currency is, however, not legally banned and the government is in the process of enacting a law in this regard.
In March this year, then Union minister of state for finance Anurag Thakur had said that the government would be extra careful while taking any decision regarding cryptocurrencies as they are highly volatile and could have security implications. The government, however, could embrace the blockchain technology of virtual currencies, he added.
Last year, Union finance minister Nirmala Sitharaman had told the Rajya Sabha that the government did not consider cryptocurrencies as a legal tender. Quoting from the Budget speech for 2018-19, she said: “The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The government will explore the use of block chain technology for ushering in the digital economy.