The Reserve Bank of India on Thursday told a parliamentary panel that virtual digital assets like cryptocurrency are a threat to an emerging economy like India and such assets should not be legalised in the country.The RBI also told the Parliamentary Standing Committee on Finance, headed by BJP member Bhartruhari Mahtab, that China and Qatar are among the countries that have banned such financial activities, while Europe has allowed virtual digital assets in a very stringent, regulated manner.
The committee held the meeting with the representatives of the RBI on ‘A Study on Virtual Digital Assets (VDAs) and Way Forward’.
The committee also discussed with the representatives of the Institute of Chartered Accountants of India (ICAI) on ‘A Study on Virtual Digital Assets and Way Forward’.The RBI told the panel that VDAs are a threat to an emerging economy like India and should not be legalised in India at this stage, sources aware of the deliberations said.
The central bank submitted that digital money could be used for illegal activities such as terror funding and narcotics smuggling.It is very difficult to keep a tab on offshore entities involved in crypto trade, posing significant challenges for regulatory authorities, the RBI said.After the meeting, Mahtab told reporters that the RBI is against legalising the VDAs in India.The BJP leader also said that the committee has been auditing part of VDAs as per the income tax law.The apex body of the country’s chartered accountants also submitted to the committee and conveyed that they support a comprehensive VDA law.The Indian Chartered Accountants Institute (ICAI) said it can assist by providing a principle-based approach and guidance to enhance clarity for stakeholders and strengthen the financial reporting and compliance frameworks related to VDAs.“Accounting and Auditing for VDAs ICAI can undertake comprehensive research on the various forms of VDAs and analyse their economic characteristics. Based on such research, ICAI may develop detailed guidance on their recognition, measurement, presentation, and disclosure in financial statements,” it said.
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