What Did RBI Governor And FM Sitharaman Say On Cryptocurrency Today? Read Here

New Delhi: In a press conference today, RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman said that the government and RBI are discussing the cryptocurrency matter internally and there is complete harmony between them. Das also cleared the air around Monetary Policy Committee’s inflation projections. He was addressing a press conference after the central board meeting.Also Read – LIC IPO: What We Know So Far

On cryptocurrency, FM Sitharaman said, “With RBI & Ministry, not just on crypto but on every other thing as well, I think there’s complete harmony with which we’re working, respecting each other’s domain also knowing what we’ve to do with each other’s priorities & in interest of the nation. There’s no turfing here.” Also Read – When Will RBI Launch Digital Rupee And How Will it be Different From Normal Currency? Shaktikanta Das Answers FAQs

Also Read – RBI Leaves Repo Rate Unchanged at 4%, Projects Real GDP Growth at 7.8% FY 2022-23 | 10 Points

Das added, “Like several other issues, this particular issue is internally under discussion b/w RBI & Govt. Whatever points we have, we discussed with Govt. Beyond that I think I will not like to further elaborate.”

‘Inflation On A Downward Slope’

Since Thursday, various media reports have emerged that have questioned the MPC’s stance to keep the interest rates unchanged and decrease the inflation projection for the next year amidst rising crude oil prices and geopolitical tensions.

The RBI projected an inflation rate of 4.5 per cent for the year 2022-23. The repo rate has been kept unchanged since May 2020 at 4 per cent. On the other hand, the crude oil prices touched $95 per barrel on Monday.

Das, however, was confident about the projections. “As far as India is concerned, if you look at the momentum of inflation right from last October onward, it is on a downward slope. It’s primarily the statistical reasons, the base effect, which has resulted in higher inflation especially in Q3”, he said.

He further stated that RBI has taken inflation into account before calculating the projection. He added, “The same base effect will play in different ways in the coming months. Today’s inflation print is expected to be close to 6%. That should not surprise or create any alarm because we have taken that into consideration.”

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Cryptos don’t have any underlying value, not even a tulip: RBI Governor

Reiterating his long-standing position, (RBI) Governor on Thursday warned that private pose a big threat to India’s macroeconomic and financial stability.

At the post-policy meeting with the media, Governor Das said that who invest in should keep in mind that they were doing so at their own risk. do not have any underlying, not even a tulip, he said. This was a reference to tulipmania, one of the famous market bubbles and crashes of all time, when speculation drove the value of tulip bulbs to extremes in the seventeenth century.

Private cryptocurrencies are a big threat to our macroeconomic and financial stability, Das said. Cryptocurrencies, which have currency-like character, will undermine RBI’s ability to deal with financial stability issues, he added.

Das’s withering assessment of cryptocurrencies comes at a time when the government has moved to tax gains on crypto transactions at 30 per cent.

Many in the industry viewed this as the government softening its stance on such assets and not banning them outrightly, although a 30 per cent tax on income was a bit on the higher side, many had opined. However, they were happy with the fact that at least the government was warming up to the idea of this asset class.

Looking at the magnitude and frequency of transactions in virtual assets, Finance Minister Nirmala Sitharaman decided to tax the income from crypto transactions. She also proposed to provide for Tax Deduction at Source (TDS) for payment made in relation to transfer of virtual digital assets at the rate of 1 per cent to capture the transaction details.

Previously, the RBI governor had stated that the number of users logging into cryptocurrency platforms was “highly exaggerated”. Accounts are being opened for investments as low as Rs 500. Moreover, the central bank received feedback that credit was being provided to open the accounts and boost the numbers. These small-value consist of 70-80 per cent of the investor base of these platforms, the governor had said earlier. But he also acknowledged that the value of investments in cryptocurrencies had increased in the country.

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Cryptocurrency has no underlying value, not even a tulip, warns RBI governor

The Reserve Bank of India (RBI) has once again cautioned investors on the risks posed by private cryptocurrencies in India. 

In a post monetary policy press conference, RBI governor Shaktikanta Das said Private cryptocurrencies are a threat to macroeconomic and financial stability and investors, who are investing at their own risk, should keep risks in mind.

“Private cryptocurrencies or whatever name you call it are a threat to our macroeconomic stability and financial stability. They will undermine the RBI’s ability to deal with issues of financial stability and macroeconomic stability,” Das told reporters.

Cautioning investors, the governor said such assets have no underlying value whatsoever, “not even a tulip”.

Earlier, the Union Budget has proposed a 30% tax on virtual digital assets like Bitcoin and Ethereum.

Further, the buyer shall be liable to withhold tax on payments made for the purchase of such asset at the rate of 1% as withholding tax. Also, gains or losses on sale of virtual assets will not be allowed as set off against any other gains or losses. i.e. it will be treated as a separate class of asset.

While presenting the Budget, Sitharaman has also said RBI will launch its own digital currency or digital asset of cryptocurrency.

Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around 40,000 crore ($5.37 billion). No official data is available on the size of the Indian crypto market.

The crypto market in India grew 641% in the year through June 2021, according to an October report from Chainalysis, an industry research firm.

Earlier, during the day, the Central bank has left the benchmark interest rate or repo rate — the rate at which banks borrow from the Central bank — unchanged at 4% for the tenth consecutive time and decided to continue with accommodative stance.

However, in a surprise move, RBI has also not tinkered with reverse repo rate, a move, which was widely believed by commentators and analysts that the time has come for policy normalisation amid inflationary concerns.

The RBI has adopted an ultra-loose monetary policy in the wake of coronavirus pandemic and in order to shore up the economy with adequate liquidity, it has last slashed key rate to record low of 4% and it has been held at that level since May 2020.

The governor has further projected India’s economic growth for the financial year 2023 (FY23) at 7.8%. The growth rate for the current financial year is retained at 9.2%.

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