On January 13, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, reaffirmed his support for an outright ban on cryptocurrencies. He said that cryptocurrencies are nothing more than a kind of game and their apparent value is nothing more than speculation.
RBI wants to ban crypto
Das, while participating in a panel discussion at the Business Today Banking and Economy Summit, reaffirmed the central bank’s stance on cryptocurrencies and said they should be banned. He said the RBI’s opinion on cryptocurrency is very clear, and that it should be banned.
The RBI Governor said that block chain the technology should be promoted because of its many uses; yet, he is of the opinion that cryptocurrencies have no underlying value.
However, for something to be considered an asset or a financial product, it must first have an underlying value. Some people consider cryptocurrencies as an asset, while others call them a financial product. But again, the RBI Governor warned that cryptocurrencies have no real value.
Anything without any underlying, the value of which depends entirely on simulation, is nothing but 100% speculation or, to put it very bluntly, it is gambling.
Das said it would be necessary to consider something as a kind of gambling and establish regulations for it to be legalized in a jurisdiction that now prohibits such activities.
He went on to say that the allegation that cryptocurrencies attempt to impersonate a financial product or an asset in the financial market is absolutely irrelevant.
Moreover, according to Shaktikanta Das, allowing the trading of cryptocurrencies within the country’s borders would be detrimental to the authority of the country’s central bank.
He elaborated, saying that the main macroeconomic rationale for banning cryptocurrencies is that they have the necessary characteristics to function as a medium of exchange and are therefore subject to the ban.
Since most cryptocurrencies are priced in dollars, it is reasonable to imagine that 20% of all transactions in a given economy are conducted using cryptocurrencies produced by private entities if this trend is allowed to continue growing unchecked, Das said.
According to the central bank governor, the RBI, which acts as the monetary authority of the country in its capacity as central bank, would lose control of the amount of money circulating in the economy if it allowed the use of crypto -currencies.
Please believe me these are not empty red flags. A year ago at the Reserve Bank, we said this was all in danger of collapsing sooner rather than later. And if you see last year’s developments, culminating in the FTX episode, I think I don’t need to add anything more.