Why Did The RBI Governor Warn About Cryptocurrency? | Crypto News

RBI warning on cryptocurrency:

Doubts remains regarding cryptocurrency regulation in India. The government has already announced a 30% tax on crypto and virtual assets as well as 1% TDS. The huge drop in the crypto market in the past few days has left investors stunned. On the one hand, the government is telling the threat of money laundering through terror funding through crypto.

At the same international forum, Finance Minister Nirmala Sitharaman has offered to unite all the countries to make strict rules for this. Now the news has come that the RBI has said, expressing the possibility of a part of the economy being dollarized through installments. To do so would be against the sovereign interest of the country.

According to the report, top officials of the Reserve Bank of India have told this to a parliamentary panel. According to the information, top officials, including Reserve Bank Governor Shaktikanta Das, presented their views in front of the Polymer Standing Committee on Finance headed by former Minister of State for Finance Jayant Sinha.

He put his apprehensions regarding cryptocurrency in front of him and said that there will be challenges regarding the stability of the financial system. Reserve Bank officials said that now monetary policy will seriously undermine the ability of RBI to base monetary policy and regulate the monetary system of the country.

He said that cryptocurrency has the potential to become a medium of exchange and can replace the rupee in domestic as well as cross-border financial transactions. This currency may occupy a part of the monetary system and may also reduce the RBI's ability to regulate the flow of money in the system.

RBI officials cautioned that cryptocurrencies can also be used for money laundering and drug trafficking and not only this, it can become a major threat to the stability of the country's financial system. He told the parliamentary committee that almost all currency is based on the dollar and that foreign entities issue them.

In such a situation, it is possible that due to this some part of our economy will be dollarized, which will be against the sovereign interests of the country. RBI officials said that cryptocurrencies will also harm the banking system as people may invest their hard-earned money in them, as a result of which banks may lack the resources to provide them.

Meanwhile, the crypto industry has urged the government to reduce the TDS on cryptocurrency transactions from the proposed 1% to 0.01 or 0.05%. The industry said that not doing so would harm the retail traders. Coindcx CEO and co-founder Sumit Gupta said that a 30% tax on income from the cryptocurrency is high and should be reduced.

He said that now talking with the government at the industry level and we have given a presentation that how 30% tax and 1% TDS are harmful to the growth of the industry. This situation will run out of cash from the market and in such a situation, retail investors will suffer due to crypto tax. Let us tell you, although there is no official data available on the size of the Indian crypto market, it is estimated that there are 15 million to 20 million investors in India with a total crypto holding of around $5.34 billion.

Billionaires  suffer a loss due to the decline in crypto:

The cryptocurrency market is going through a period of continuous decline. The prices of most digital currencies have started falling. At the same time, the level of market capitalization has increased the concern of investors. Terra Luna was included in top cryptocurrencies a few days ago. It has lost 99% of its value in the past week or so.

Bitcoin, the world's largest cryptocurrency, has fallen to record levels in the last seven days and the trend of the currency's decline does not seem to stop yet. On Thursday, all the top cryptocurrency is trading on the red mark. According to the data till 09:00 pm, bitcoin was trading at 24,24,000, down 2%. Ethereum fell 12% to INR 1,65,000.

The same Solana fell 18% to ₹ 3,870. Dogecoin was down 10% to trade at ₹6.80. There was a huge drop in 13 times. The price of Terra Luna was trading down 99.7% at ₹ 0.65, so the last week has been a particularly dark time for the market. Investors are worried about the huge fall. Meanwhile, Zerodha's co-founder Nitin Kamath has cautioned Indian investors from people in the coin base through a tweet.

Kamath said in a post on Twitter that investors' assets could be at risk if Coin base goes bankrupt. In the stock market, the shares are held in Demat with the depository, and there is no risk associated with the broker, whereas in crypto there is a risk. This news comes at a time when investors are already battling a huge wave of decline in the currency market.

Following this, Brian Armstrong, the founder, and CEO of Coinbase took to Twitter to favor the company, saying there was no risk of bankruptcy, and users were safe. Selling in a single cryptocurrency is causing sweat not only to cryptocurrency investors but also to founders of crypto exchanges and some other businessmen. Coinbase CEO Brian's wealth has plummeted over the past few days.

Armstrong's assets were approximately $13.7 billion in November 2021 and about $8 billion at the end of March. And now the asset come down to just $2.2 billion. There are a large number of billionaires who have suffered losses due to the fall in the crypto market. The wealth of Michael Novogratz, CEO of crypto merchant bank Galaxy Digital, was worth about $ 8.5 billion at the beginning of November last year, which has now come down to about two and a half-billion dollars.

Michael Novogratz, a major contributor to the advancement of stable coin terraUSD, is also at risk of being bankrupted by the fall in the price of the crypto token Luna of the same system. In the last two years, people have invested heavily in the crypto market and they have also made a lot of profit. In such a time many people have become billionaires and now the kind of circumstances have been created.

In such a situation, there is a danger of being bankrupt on them. According to data from the Bloomberg Billionaires index exchange, Binance CEO Changpeng Zhao's wealth at the beginning of this year was around $96 billion, which has come down to about $ 11.6 billion. Actually, after the increase in the rate of the Federal Reserve in the US, there is a sell-off in the stocks and this has also affected the crypto segment. 

Along with this, RBI has also increased the interest rates in India. The war between Russia-Ukraine and rising inflation, the fall of the rupee against the dollar, are all affecting the market in a way. Experts say that one of the reasons for such a huge decline in currency is the ongoing exercise to regulate the currency in the world. 

In some countries, it has also been declared as a legal tender, in which El Salvador's name comes first. This move of El Salvador was told in the past that declaring bitcoin a legal tender in the country does not prove beneficial and is not giving attention to transactions in two currencies. At the same time, the governments of most countries at the global level are considering it a threat in terms of safety. 

The Government of India has also made a provision to levy a 30% tax on income from the cryptocurrency in the budget for 2022. For this reason, investing money in crypto is no longer a profitable deal for investors, and are selling cryptocurrencies. There is a continuous decline in the second market. Experts are also thinking wisely and advising on investing in the money market. 

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