Private Cryptocurrencies Pose Immediate Risks to Customer Protection, Says RBI

Mumbai, Dec 29: Private cryptocurrencies pose quick dangers to buyer safety and are susceptible to frauds and excessive value volatility, given their extremely speculative nature, the Reserve Bank of India (RBI) mentioned in its monetary stability report launched on Wednesday. The newest report famous that the proliferation of personal cryptocurrencies throughout the globe has sensitised regulators and governments to the related dangers.

‚ÄúPrivate cryptocurrencies pose quick dangers to buyer safety and anti-money laundering (AML)/combating the financing of terrorism (CFT). They are additionally susceptible to frauds and to excessive value volatility, given their extremely speculative nature,” it said.

According to the Financial Action Task Force (FATF), the virtual asset ecosystem has seen the rise of Anonymity-Enhanced Cryptocurrencies (AECs), mixers and tumblers, decentralized platforms and exchanges, privacy wallets, and other types of products and services that enable or allow for reduced transparency and increased obfuscation of financial flows. New illicit financing typologies continue to emerge, including the increasing use of virtual-to-virtual layering schemes that attempt to further muddy transactions in a comparatively easy, cheap and anonymous manner, the report said.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was included in the Lok Sabha Bulletin-Part II for introduction in the Winter Session of Parliament that concluded on December 22. According to the bulletin, the bill, which could not be introduced, sought to create a facilitative framework for the creation of the official digital currency to be issued by the RBI.

It also sought to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. The aggregate market capitalization of the top 100 cryptocurrencies has reached USD 2.8 trillion.

In the EMEs that are subject to capital controls, the report said, free accessibility of crypto assets to residents can undermine their capital regulation framework.


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