On the eve of 14th February, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar launched an attack on cryptocurrency, saying banning cryptocurrency is “perhaps the most advisable choice open to India.”
The governor shared his view while he spoke at the Indian Banks Association 17th Annual Banking Technology Conference and Awards. “We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated that found that none of them stand up to basic scrutiny.”
This issue was raised significantly to an ongoing debate on whether to ban cryptocurrency or not. The deputy governor put forward different factors to highlight the concerns caused by private cryptocurrencies in the financial system. This is probably the first official call on banning cryptocurrencies by an RBI top official.
RBI Governor’s views
Before, RBI Governor Shaktikanta Das has shared his views on the harm associated with cryptocurrencies and how they threaten macroeconomic stability. He also advised investors to be cautious while investing in Cryptocurrencies, at the post-monetary policy presser. He talked about the risks involved, and said that they have no underlying asset.
The Deputy Governor said that these currencies will wreck the currency system, monetary authority, the banking system, and most probably the Government’s ability to control the economy if they are ever allowed. He further said that cryptocurrencies threaten the financial sovereignty of a country, and could lead to strategic manipulation by corporates that control them.
While the Union Government has announced 30% tax on private digital assets that will start from the next year, they refused to make cryptocurrency legal or illegal.
RBI Governor says Crypto holds no intrinsic value
T Rabi Sankar said that Cryptocurrencies holds no intrinsic value as they are not amenable to definition as a currency, commodity or asset. He even added saying that they are similar to Ponzi schemes.
“These should be reason enough to keep them away from the formal financial system. Additionally, they undermine financial integrity, especially the KYC regime and AML/CFT regulations and at least potentially facilitate anti-social activities.” Further, Sankar added, “Cryptocurrencies have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution.”
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