India’s finance minister has informed parliament that the central bank, the Reserve Bank of India (RBI), wants cryptocurrencies to be prohibited. However, she noted that “any legislation for regulation or for banning can be effective only after significant international collaboration.”

Indian Finance Minister on Crypto Ban and Regulation

Indian Finance Minister Nirmala Sitharaman answered some questions about cryptocurrency on Monday in Lok Sabha, the lower house of India’s parliament.

Parliament Member Thirumavalavan Thol asked the finance minister whether the Reserve Bank of India (RBI) “has recommended for framing suitable legislation to restrict the flow of cryptocurrency in India” and whether “the government has any plan to legislate any law restricting the use of cryptocurrency in India.”

The finance minister replied: “In view of the concerns expressed by RBI on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, RBI has recommended for framing of legislation on this sector.” She elaborated:

RBI is of the view that cryptocurrencies should be prohibited.

However, Sitharaman noted that “Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage,” adding:

Therefore any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.

The Indian government has been consulting with the International Monetary Fund (IMF) and the World Bank on crypto policies.

Last week, Sitharaman called on the G20 countries to bring crypto within the “Automatic Exchange of Information” framework, which over 100 countries are already using. The Financial Stability Board (FSB) also said it is working on a “robust” regulatory framework for crypto assets and will report its recommendations to the G20 finance ministers and central bank governors in October.

RBI Governor Shaktikanta Das recently said that “Cryptocurrencies are a clear danger,” emphasizing that “Anything that derives value based on make-believe, without any underlying, is just speculation under a sophisticated name.” In addition, the Indian government’s chief economic adviser, V. Anantha Nageswaran, warned in June about the danger of crypto and the risks posed by its lack of regulation.

Meanwhile, cryptocurrency income is taxed at 30% in India, and a 1% tax deducted at source (TDS) on crypto transactions went into effect earlier this month.

What do you think about the comments by the Indian finance minister? Let us know in the comments section below.

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An op-ed article published in the state-backed Chinese publication Economic Daily, has suggested that the recent crash of the Terra blockchain’s LUNA and the de-pegging of the UST stablecoin vindicate the Asian country’s decision to ban crypto-related activities. In the article, the author names the interest rate hikes by the U.S. Federal Reserve and the buying and selling of crypto assets by several investment giants as the causes of the recent market crash.

Impact of Recent US Interest Rate Hike

An author writing for China’s state-backed publication, Economic Daily, has argued that the recent crash of Terra’s LUNA and the de-pegging of the UST stablecoin vindicates his country’s decision to block or prohibit virtual currency-related activities. The author, Li Hualin, also claimed that China’s “decisive” and “timely” action helped to “extinguish the ‘virtual fire’ of virtual currency speculation and put ‘protection locks’ on investors’ wallets.”

As reported by Bitcoin.com News, Terra blockchain’s native token LUNA’s troubles started after the network’s other project, the algorithmic stablecoin UST, lost its peg against the U.S. dollar. Initial efforts to rescue the stablecoin precipitated the native token’s plunge from a price of over $87 on May 4, 2022, to a current price of just under $0.0003.

While some crypto experts have placed the blame for the token’s crash on the actions of the project’s leader, Do Kwon, in the opinion piece, the Chinese author appears to attribute the token’s fall mainly to the raising of interest rates by the U.S. Federal Reserve. Explaining how the rate rise caused the token to plummet, the author wrote:

Since the beginning of this year, the Federal Reserve has launched an interest rate hike cycle, and global liquidity has tightened. Especially in early May, the Federal Reserve raised interest rates by 50 basis points at a time, which had a negative impact on capital and market sentiment, and virtual currencies were the first to bear the brunt.

Virtual Currency and the Chinese Law

Following the crash of the two Terra tokens, some within the crypto community are still trying to piece together what may have caused the spectacular collapse. However, others have already accused two firms, Blackrock and Citadel, of being behind LUNA’s woes. These allegations have been rejected by the firms.

The Chinese author, in the meantime, claims in the piece that the involvement of investment giants in crypto markets “can lead to violent fluctuations in currency values, triggering a large number of sell-offs.”

Hualin also reiterated that virtual currency transactions are not protected by Chinese law. These comments appear to contradict the recent Shanghai High People’s Court judgment affirming bitcoin to be a virtual asset protected by Chinese law.

The author ends the article by urging investors to “remain rational, promptly eliminate the greed of bottom-hunting and get rich overnight, and stay away from related trading speculations, otherwise it is very likely that ‘currency will go to the fortune.’”

What are your thoughts on this story? Tell us what you think in the comments section below.

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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. Bitcoin.com 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.