RBI Deputy Governor: Need to regulate cryptocurrency

Reiterating the view points of Raghuram Rajan, Governor of Reserve Bank of India (RBI), Deputy Governor SS Mundra has also stressed the need to regulate cryptocurrency market in the country, according to latest report by Business Standard.

Speaking at the annual Financial Institution Benchmarking & Calibration (FIBAC) conference in Mumbai, Mundra said, "It is near impossible to regulate the behavior and choices of individuals...hence, it will be more practical for the regulatory authorities to push for bringing in appropriate regulatory changes in their jurisdiction which would enable regulation of the aggregators' electronic dealing platform."

The regulator is also closely monitoring the cryptocurrency space, along with other areas from where finance is raised. "As a regulator, one might not be overtly concerned about the manner in which the finance is raised, but there is concern around orderly growth of the system, consumer protection and grievance redressal, disaster recovery and business stability plans for intermediating electronic platforms," he said.

Last week, RBI Governor had said though the central bank had not intervened in the cryptocurrency space until now, it was carefully watching this area. The central bank had even raised apprehensions against cryptocurrencies back in December 2013.

Mundra further said there was a need to identify the grey zone areas in cryptocurrency quickly and to share experiences between different regulators to ensure consumer protection. He also stressed on the need to strengthen the Financial Stability and Development Council, as well as state-level coordination committees.

Moreover, RBI Deputy Governor Shri R Gandhi also spoke at the event and shared his views on cryptocurrencies and crowdfunding. He said these developments are innovative and can assist financial inclusion and therefore, inclusive growth.

However he added, "Digital currencies and crowdfunding have the potential to support criminal, anti-social activities like money laundering, terrorist funding and tax evasion. While we do not have any reported instances of crowdfunding in this respect, cryptocurrencies have been widely suspected to finance criminal activities. We have to be carefully and critically watching these developments".