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Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday, December 13, berated cryptocurrencies and compared crypto trading to gambling. Das also said that cryptocurrency should be banned from India.
While talking to media at an event, Das said: “RBI’s position is very clear, all cryptos should be banned. However, the technology of blockchain needs to be supported as it has so many other applications.”
Talking about the reason behind his call for a crypto ban, Das added that not only is the digital currency vulnerable to being used for terror funding, but even the definition of cryptocurrency is also not clear. “Some people call it an asset, while others call it a financial product and if that be the case, it has to have some underline. In the case of crypto, there is no underline.”
RBI had earlier predicted that the whole hullabaloo around crypto is going to collapse and looking at the FTX failure, it can be clearly assumed that the future of cryptocurrency looks bleak.
To check and counter the growth of cryptocurrencies, the central bank recently launched in pilot mode, its own e-rupee or central bank digital currency (CBDC). Das said that CBDCs are the future of money and their adoption can help save on logistic and printing costs.
Das also pointed out the volatile prices of “Every asset, every financial product has to have some underlying value but in the case of crypto, there is no underlying value. Anything without any underlying value and, whose value is dependent entirely on make-believe is nothing but 100 percent speculation or to put it very bluntly, it is gambling,” he said.
Das added that India doesn’t allow gambling and if cryptocurrency should be treated as gambling, then there should be specific rules for that. “Crypto is not a financial product then, therefore crypto masquerading as a financial product or asset is completely a misplaced argument.”
He expressed an apprehension that if cryptocurrencies are used for financial transactions, then RBI will lose control over the money supply in the economy. “RBI’s authority to decide on monetary policy and the level of liquidity that needs to be maintained will be undermined. It will lead to the dollarisation of the economy.”
The RBI governor was of the opinion that on a macro-level, cryptocurrencies have the potential to become a means of exchange for doing a transaction. “Most of it is dollar-denominated and if one allows it to grow, which means 20 percent of the transactions is happening through crypto, that means it is not happening by the central bank and it is issued by private companies all over the world.”
