The RBI presented this view to the Parliamentary Standing Committee on Finance, chaired by BJP member Bhartruhari Mahtab, noting that countries like China and Qatar have imposed bans on these financial activities, while Europe has implemented highly regulated frameworks for virtual digital assets.
The committee convened to discuss “A Study on Virtual Digital Assets (VDAs) and Way Forward” with RBI representatives.
Additionally, discussions were held with the Institute of Chartered Accountants of India (ICAI) on the same topic.
According to sources familiar with the meetings, the RBI reiterated that VDAs are detrimental to an emerging economy like India and should not be legalized at this juncture.
The central bank expressed concerns that digital currency could facilitate illegal activities, such as terrorism funding and narcotics trafficking.
It highlighted the difficulties in monitoring offshore entities involved in cryptocurrency transactions, creating substantial challenges for regulatory bodies, the RBI stated.
Following the meeting, Mahtab informed reporters that the RBI opposes the legalization of VDAs in India.
The BJP leader additionally mentioned that the committee has been reviewing aspects of VDAs in accordance with income tax laws.
The leading body for chartered accountants in the country also presented its views to the committee, advocating for a comprehensive legal framework for VDAs.
The Indian Chartered Accountants Institute (ICAI) expressed its capability to provide a principle-based approach and guidance, aiming to enhance clarity for stakeholders and fortify financial reporting and compliance frameworks related to VDAs.
“In terms of Accounting and Auditing for VDAs, ICAI can conduct in-depth research on various forms of VDAs and evaluate their economic characteristics. Through this research, ICAI may develop detailed guidelines for their recognition, measurement, presentation, and disclosure in financial statements,” it stated.
