India's central bank has recommended that Prime Minister Narendra Modi's government regulate or ban cryptocurrencies, but the country may need international collaboration to make a potential ban effective, the nation's Finance Minister Nirmala Sitharaman said in a written response to a question in the lower house of the Parliament, local media outlets reported.
"In view of the concerns expressed by the RBI [Reserve Bank of India] on the destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited," Sitharaman said in the response.
The Modi-led government believed that a "global collaboration" is needed for any effective regulation or ban, she added.
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Sitharaman told the parliament that international collaboration was required to prevent regulatory arbitrage given the borderless nature of cryptocurrencies such as Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), Dogecoin (CRYPTO: DOGE), and others.
"Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards," she said.
The comments from the Indian finance minister come at a time when the country is awaiting the government's consultation paper on crypto. Reports suggest the government may introduce legislation to regulate the sector in the Monsoon Session of Parliament, which began Monday.
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