The Reserve Bank of India Governor Insists on Banning Cryptocurrencies

The Reserve Bank of India Governor Insists on Banning Cryptocurrencies

The Reserve Bank of India has once again insisted on banning all cryptocurrencies, including bitcoin and ether. The governor of the Reserve Bank of India (RBI) considers cryptocurrency trading to be gambling. He warned that crypto "will undermine the authority of the RBI and lead to the dollarization of the economy."

Crypto Could Lead to the Dollarization of the Economy

Speaking at the Business Today Banking and Economy Summit on Friday, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, reiterated his stance on banning cryptocurrencies.

Das said the central bank’s view is to completely ban all cryptocurrencies, including bitcoin and ether, as India Today reported, quoting him, "RBI’s position on crypto is very clear—it should be banned."

Emphasizing that cryptocurrencies have no underlying value, the Reserve Bank of India governor described:

"Some people call cryptocurrency an asset, some call it a financial product, but every asset or financial product needs to have an underlying value. But cryptocurrency does not have any underlying value."

Das expressed his opinion on the market prices of cryptocurrencies, stating that they are based on speculation alone. He likened cryptocurrency trading to gambling.

"Anything whose valuation is entirely dependent on make-believe is nothing but 100% speculation, or to put it bluntly, it is gambling," the RBI governor said. "In our country, we don’t allow gambling. If you want to allow gambling, treat it as gambling and lay down the rules."

Reiterating that he does not see crypto as a financial product, the central bank governor said:

"Cryptocurrency masquerading as a financial product or a financial asset is a completely misplaced argument."

RBI Rules Out Crypto as Financial Product or an Asset

Das also warned about the risks that crypto poses to the Indian economy. He cautioned:

"The Reserve Bank, being the monetary authority of the country as the central bank, will lose control over the money supply in the economy. It will undermine the authority of the RBI and lead to the dollarization of the economy."

RBI officials similarly warned in May last year that crypto could lead to the dollarization of a part of India’s economy, "which will be against the country’s sovereign interest."

India currently does not have a regulatory framework for cryptocurrencies. The government has been working on a crypto bill for several years. Indian Finance Minister Nirmala Sitharaman said in October last year that the government hopes to discuss crypto regulation with the G20 countries to establish a technology-driven regulatory framework for crypto assets.

What is your take on RBI Governor Shaktikanta Das’ stance on banning cryptocurrencies? Please post your comments.