The Reserve Bank of India (RBI) has issued a stark warning regarding the use of Bitcoin and other digital currencies. Citing the crash of FTX, RBI governor Shaktikanta Das proclaimed that these unstable instruments 'are nothing but gambling' and their perceived value is based entirely on “make-believe”.
Addressing a Business Today event, Das fired repeated salvos against cryptos arguing that any asset or financial product must have some underlying value.
Not unlike tulip manias in the early part of the past century, cryptocurrencies do not have any real value, according to Das. He particularly emphasized that crypto is "nothing but 100 percent speculation."
Das expressed concerns about the increasing digitalization of payments and the risk posed by tech giants dominating payment networks.He also noted that allowing cryptos to gain too much influence may lead to "dollarization" of the economy as most cryptos are dollar-denominated, a scenario he believes is especially dire given that many economies rely heavily on their own currencies for monetary control.
Consequently, he suggested outright banning cryptocurrency instead of misclassifying it as a legitimate financial product.
As reported by U.Today, Das raised serious concerns about the potential implications of cryptocurrencies for Indian financial stability at the top of the crypto bubble in November 2021.
It remains to be seen what policy changes will ensue in response to Das' statement. Regardless, its shaping up to be an eventful period ahead for India's cryptocurrency industry, which remains plagued by uncertainty.
Valeria Blokhina
