Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said that cryptocurrency should be completely banned from the country and it can just be called ‘gambling.
On being asked about his stance on crypto at the BT’s Banking & Economy Summit in Mumbai, “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.”
Explaining further about the reason behind the crypto ban, Das said that besides the commonly known danger of terror funding, the definition of cryptocurrency is very unclear. “Some people call it as an asset, while others call it as a financial product and if that be the case, it has to have some underline. In the case of crypto, there is no underline.”
Das also highlighted the volatility in prices of cryptocurrency, which makes it unreliable. “The volatility in prices is based on the make-believe concept where a particular crypto’s price can go up or down. So, anything that comes without any underline whose valuations is entirely dependent on make-believe is just 100 per cent speculation or it can be bluntly termed as gambling.”
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.”
On the macro-level, he said, “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.”
If the transactions start happening via crypto, 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.”
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 the cryptocurrency looks bleak.
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