India’s RBI says crypto is prone to fraud and poses immediate risk to consumer protection – Bitcoin News Regulations

India’s RBI says crypto is prone to fraud and poses immediate risk to consumer protection – Bitcoin News Regulations

India’s central bank, the Reserve Bank of India (RBI), has warned of the multiple risks that cryptocurrency poses to the country’s financial stability. “They are also prone to fraud and extreme price volatility,” Apex Bank said, noting that “cryptocurrencies pose immediate risks to customer protection and the fight against money laundering (AML) / the fight against terrorist financing (CFT).”

RBI’s assessment of cryptocurrency

India’s central bank, the Reserve Bank of India (RBI), released its biennial Financial Stability Report (FSR) last week. The 144-page document includes a section on “private cryptocurrency risks”. The term “private” refers to all cryptocurrencies not issued by the RBI, including bitcoin and ether.

The Central Bank wrote:

The proliferation of private cryptocurrencies around the world has sensitized regulators and governments to the associated risks.

“Private cryptocurrencies pose immediate risks to protect users and prevent money laundering (AML) / the fight against terrorist financing (CFT),” the RBI said.

In addition, the central bank noted: “They are also prone to fraud and extreme price volatility, given their very speculative nature. Long-term concerns include capital flow management, financial and macroeconomic stability, monetary policy transmission and currency substitution. ”

The report also cites a finding by the Financial Action Task Force (FATF) that “the virtual asset ecosystem has seen an increase in cryptocurrencies with improved anonymity (AEC), mixers and tumblers, decentralized platforms and stock exchanges, privacy wallets and other types of products. and services that enable or allow reduced transparency and increased concealment of financial flows. ” The RBI emphasized:

New typologies of illicit financing continue to emerge, including the increasing use of virtual-to-virtual layer schemes that try to further blur transactions in a relatively easy, inexpensive, and anonymous way.

Noting that the market capitalization of the 100 best cryptocurrencies reached $ 2.8 trillion, the RBI warned that “In EME [emerging market economies] subject to capital control, free access to crypto assets for residents can undermine their capital regulation framework. ”

The report also addresses decentralized finance (defi), which “the Bank for International Settlements (BIS) recently identified as a threat to the concentration of power,” the Central Bank of India said, adding:

The rapid growth of decentralized finance (defi) is focused mainly on speculation and investment and arbitrage in crypto assets, rather than on the real economy.

The RBI added that the restriction on the provisions on AML and knowledge of its client (KYC), “together with the anonymity of the transaction, exposes defi to illegal activities and market manipulations and is a concern for financial stability”.

The Bank of India has said on several occasions that it has large and serious concerns about cryptocurrency. At a recent meeting of the central board of directors, the RBI called on the government to completely forbidden cryptocurrencies, stating that a partial ban will not work.

Meanwhile, the Indian government has postponed the introduction of cryptocurrency laws. The bill was considered for consideration at the winter session of the parliament, but it was not considered. The government is now reportedly processing account.

Labels in this story

AML, against money laundering, DO, CFT, decentralized finance, Defi, fatf, Financial Action Working Group, financial stability, Illegal activities, central bank of india, key, market manipulation, private cryptocurrencies, RBI, Reserve Bank of India, Stablecoin

What do you think about the warning of the Central Bank of India about cryptocurrency? Let us know in the comments section below.

India’s RBI says crypto is prone to fraud and poses immediate risk to consumer protection – Bitcoin News Regulations

Kevin Helms

A student of Austrian economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in bitcoin security, open-source systems, network effects and the crossroads between economics and cryptography.

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