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Indian FM Nirmala Sitharaman Crypto Stance: “they cannot be currencies”

Finance Minister Nirmala Sitharaman asserts India's non-recognition of cryptocurrencies as legal tender, urging for G20 collaboration on regulation.

Image Source: Facebook/Nirmala Sitharaman
  • FM Nirmala Sitharaman reaffirms that cryptocurrencies cannot be considered as legal currencies in India, aligning with the government's perspective on digital assets as entities for trading and speculation.
  • Highlighting the challenges of unregulated cryptocurrency flows, FM says there’s potential for cryptocurrencies to facilitate illegal activities without uniform regulations.
  • FM advocates for a cohesive regulatory framework among G20 nations to address potential risks and ensure financial stability.

According to the Chainalysis' 2023 Global Crypto Adoption Index, India stands as the leader in cryptocurrency adoption among 154 countries. However, despite this achievement, the country grapples with its own set of challenges concerning the regulatory landscape of cryptocurrencies.

During the recent India Today Conclave 2024, Indian Finance Minister Nirmala Sitharaman highlighted the government's position, asserting that cryptocurrencies cannot be recognized as currencies. This distinction places them in the realm of trading, speculation, and profit-making rather than as formal currencies issued by central banks.

“We haven’t regulated them, and then we haven’t regulated them even now. But they cannot be currencies is what I’ve always held, and that’s the government of India position,” said FM.

The debate over cryptocurrencies has grown more heated, particularly due to their capabilities for international payments and the dangers posed by unregulated financial flows. FM's worries stem from the lack of uniform regulation across the globe, a situation that might unintentionally make it easier for illegal activities like drug trafficking and the financing of terrorism to thrive. 

The FM also noted that India has brought the topic of cryptocurrency regulation to the attention of the G20, voicing her belief that “some framework will soon be established.”

Moreover, India's cautious stance extends beyond the Finance Ministry. Shaktikanta Das, Governor of the Reserve Bank of India (RBI), also raised warnings earlier this year at the World Economic Forum in Davos, saying cryptocurrencies have huge risks.

“There is no underlying asset. It is not a currency, but it has the potential to become a currency in which event it can occupy the part of the payments system. It can impact your banking system and, therefore, it has very much risk involved in it,” said Das.

Edited by Harshajit Sarmah