by Kevin Helms
India’s central bank, the Reserve Bank of India (RBI), has expressed concerns that cryptocurrencies could lead to the dollarization of a part of the Indian economy. “It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country.”
The Reserve Bank of India (RBI), the country’s central bank, has warned that cryptocurrencies could lead to the dollarization of a part of the Indian economy, PTI reported Monday, citing unnamed sources.
During a briefing with India’s Parliamentary Standing Committee on Finance, top RBI officials, including Governor Shaktikanta Das, “clearly expressed their apprehensions about cryptocurrencies,” the publication conveyed.
The committee, chaired by former Minister of State for Finance Jayant Sinha, also recently questioned the Securities and Exchange Board of India (SEBI) on crypto-related issues.
Emphasizing that cryptocurrencies pose challenges to the stability of India’s financial system, the RBI officials stressed:
It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country.
India’s central bankers also noted that cryptocurrencies are used for money laundering, terrorism financing, and drug trafficking.
Moreover, they warned that cryptocurrencies could be used as a medium of exchange, replacing the rupee (INR) in both domestic and cross-border financial transactions.
The RBI officials opined:
Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities. It may eventually lead to dollarization of a part of our economy which will be against the country’s sovereign interest.
The RBI officials further explained that cryptocurrency will have a negative impact on the banking system. They noted that this asset class is attractive to people who may want to invest their hard-earned savings in it, resulting in banks having less resources to lend.
According to an industry estimate, there are approximately 15 million to 20 million crypto investors in India, with total crypto holdings of around $5.34 billion.
The Indian government is currently working on the country’s crypto policy. However, cryptocurrency income is already taxed at 30%. On July 1, a one percent tax deducted at source (TDS) will also start levying on crypto transactions.
Do you agree with the RBI that crypto could lead to the dollarization of India’s economy? Let us know in the comments section below.
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Following a Brief Fee Spike, Gas Prices to Move Ethereum Drop 76% in 12 Days
Transaction fees on the Ethereum network are dropping again after average fees saw a brief spike on April 5 jumping to $43 per transfer. 12 days later, average ether fees are close to dropping below $10 per transaction and median-sized … read more.
Bitcoin ATM Operator Indicted in New York Allegedly Running Illegal Business Attracting Criminals
A bitcoin ATM operator has been indicted in New York for running an illegal business “marketed towards individuals engaged in criminal activity.” The district attorney in charge described: “Robert Taylor allegedly went to great lengths to keep his bitcoin kiosk … read more.
Check all the news here


Write A Comment