Cryptocurrencies are akin to Ponzi schemes or worse and banning them is the most sensible option for India to avoid the threat they pose to financial and macroeconomic stability, a deputy governor at the Reserve Bank of India (RBI) said.
T. Rabi Sankar follow a similarly withering assessment of digital currencies by RBI Governor Shaktikanta Das only days after the Indian government establish a taxation framework for cryptocurrencies.
RBI Deputy Governor T. Rabi Sankar Said :
“We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi schemes, and may be even be worse,”.
Crypto exchanges and investors have been arguing for regulation of cryptocurrencies as an asset and the government’s recent budget announcement to tax gains from these has raise hopes that the they will not be ban.
RBI Deputy Governor T. Rabi Sankar dismiss the suggestion that these highly volatile virtual coins should be regulated and instead called for an outright ban.
RBI Deputy Governor T. Rabi Sankar Said :
“Cryptocurrencies are not currencies, or financial assets or real assets or even digital assets. Therefore, it cannot be regulated by any financial sector regulator. It is not possible to regulate something that one cannot define,”.
“All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India.”
RBI Deputy Governor T. Rabi Sankar said that cryptocurrencies develop to bypass the regulate financial system and that he does not accept the argument that cryptocurrencies must be permit for blockchain technology to thrive.
RBI Deputy Governor T. Rabi Sankar Said :
“The fact that they are anonymous, decentralised systems that operate purely virtually makes cryptocurrencies particularly attractive to illegal, illegitimate transactions,”
“It should be possible to maintain a blockchain without any native cryptocurrency if transactions are authenticated centrally,”.
Illicit transactions involving cryptocurrencies totalled $14 billion (approx. Rs. 1,05,990 crore) last year, RBI Deputy Governor T. Rabi Sankar said, citing a Wall Street Journal report base on a report by blockchain data platform Chainalysis.
There are about 15 million to 20 million cryptocurrency investors in India, with total holdings of about Rs. 40,000 crore, as per the industry estimates.
The RBI says the average holding continues to be small at only Rs. 1,566, which means that “wealth loss, if it is a possibility, is likely to affect only a small fraction of these investors”.
Disclaimer :
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by 2YODOINDIA. 2YODOINDIA shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.
