Reserve Bank of India (RBI) Governor Shaktikanta Das did not mince words when discussing the cryptocurrency sector at a recent conferenceclaiming that “private” cryptocurrencies will be behind the next financial crisis.
Speaking at the Business Standard BFSI Insight Summit on December 21, Das argued that private cryptocurrencies – those that are not issued by banks or governments – are not backed by anything and are mere tools for speculation..
“They have no underlying value. They have enormous inherent risks to our macroeconomic and financial stability.. I have yet to hear any credible argument for what public good or public purpose they serve,” he said.
Das joined these views and suggested that it would be best to completely ban cryptocurrencies in India.:
“Private cryptocurrency trading is 100 percent speculative activity, and I still think it should be banned…because if it’s allowed to grow, if you try to regulate and allow it to grow, mark my words, the next financial crisis will come. of private cryptocurrencies.”
Highlighting examples of that risk, the head of the Reserve Bank of India pointed to the recent implosion of FTX, led by the recently extradited Sam Bankman Fried.
“I don’t think we need to say anything more about our position after the events of the last year, including the last episode around FTX,” he said..
These comments mark another case where a key figure in politics or finance has blamed the cryptocurrency industry for the collapse of FTX; many US senators in particular have taken the opportunity to criticize digital assets in recent weeks.
Das, of course, spoke in much more favorable terms of central bank digital currencies.emphasizing that the Reserve Bank of India is actively pushing to get its digital rupee off the ground.
“In the coming days, more and more central banks will adopt digital currencies, and India has been at the forefront of the digital revolution in this century,” he said..
Historically, the Reserve Bank of India has been averse to cryptocurrencies and has questioned its value on several occasions.. Das’s latest comments show that sentiment is only getting worse; the bank had ranked the sector at the bottom of its list of systemic risks in June.
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