Cryptocurrencies could lead to the dollarization of part of the economy, contrary to the sovereign interests of India. This was stated by representatives of the Reserve Bank (RBI), The Economic Times cited sources.

According to the interlocutors, top regulatory officials drew attention to possible problems for the country’s financial stability during a briefing organized by the Standing Parliamentary Committee on Finance. They believe that cryptocurrencies could potentially replace the rupee in internal and external transactions.

“Almost all cryptocurrencies are denominated in dollars and are issued by foreign private individuals, which could eventually lead to the dollarization of part of our economy and go against the sovereign interests of the country,” the RBI said.

According to the media, officials also expressed concerns about the impact of digital assets on the banking system.

In recent years, disclosures by Indian authorities of legal initiatives related to cryptocurrencies have ranged from a complete ban, including criminal liability, to possible regulation as an entity.

In November 2021, the RBI expressed “serious concerns” regarding cryptocurrencies in the context of macroeconomics and financial stability.

In January 2022, Prime Minister Narendra Modi called for the development of a unified approach to establishing a regulatory framework for the crypto industry.

In April, India introduced a 30% tax and a controversial 1% fee on profits from cryptocurrency transactions. TDS. Later, the media learned of the authorities’ plans to increase the tax burden on the industry.

Recall that in May the Computer Response Team issued a directive requiring crypto exchanges to retain customer data for five years. That’s why the authorities plan to eliminate the realities of tax evasion.