The Reserve Bank of India (RBI) diverging from its earlier stance indicates that cryptocurrencies are not a threat in their “Report on Trend and Progress of Banking in India 2017-18” published on December 28. Nevertheless, it also highlights that with the adoption and rapid growth of cryptocurrencies, this assessment might change, stressing on the importance of constant monitoring of the sector.
Here it cites an analysis by an international body which makes recommendations and monitors the global financial system, the Financial Stability Board (FSB). Media outlet, Quartz India summarizing said, “A global financial body, which includes India, says cryptocurrencies aren’t a threat.” writes RBI in the report.
Along with RBI, the Ministry of Finance, and the Securities and Exchange Board of India are members in FSB with 23 other countries. It also includes international organizations like the Bank for International Settlements, the World Bank, the International Monetary Fund, and the European Commission.
The organization in its report analyzing the financial risk attached with cryptocurrencies and its rapid growth thinks that these assets at this time don’t pose any risk towards the global financial market at this moment.
This analysis echoes RBIs own report from last October where it states “crypto-assets do not pose a material risk to global financial stability at this time.”
The issue and concern mentioned in this report are similar to RBIs annual report which considers cryptocurrencies the attached “problematic risk” associated with the “increasing popularity leading to price bubbles raises serious concerns for consumer and investor protection, and market integrity.”
Currently, the circular from RBI on April 6 which prohibits the financial institutions from associating with cryptocurrency related business is in effect and contested in the Supreme Court of India. In the report, RBI also mentions that it has taken repeated steps warning investors on the associated risk with cryptocurrencies.