RBI Governor’s Distaste For Cryptocurrencies Surfaces Again

While talking at an economic summit, RBI Governor Shaktikanta Das 

Compared cryptocurrencies to gambling, refuting them as financial products. 

The rivalry between Shaktikanta Das, Governor of the Reserve Bank of India, and cryptocurrencies is well known in the economic sphere of the country. Mr. Das has repeatedly asked for a ban on cryptocurrencies citing the lack of underlying value in cryptocurrencies. 

Shaktikanta Das repeated his statement while addressing the Business Today Banking and Economy Summit that Reserve Bank is of the opinion of completely banning cryptocurrencies. He said that RBI is very clear about it and its stance on cryptocurrency assets has not changed. 

Shaktikanta Das went on to compare cryptocurrencies with gambling by saying that anything whose entire value is dependent on only market belief is nothing but speculation and investments in anything as such can only be gambling. 

“Anything whose valuation is dependent entirely on make-believe is nothing but 100 percent speculation, or to put it bluntly, it is gambling. In our country, we do not allow gambling. If you want to allow gambling, treat it as gambling and lay down the rules”, said Shaktikanta Das. 

Shaktikanta went on to cite his concern regarding the possibility of undermining the authority of central banks. Governor said that the increasing popularity of cryptocurrencies in the country may lead to the central bank losing control of the liquidity flow in the nation. After this, the RBI would not be able to control the monetary policies and money supply levels in the country. 

“These are not empty alarms or signals. A year ago, we said this whole thing is likely to collapse sooner than later and if you see the developments, I think I don’t need to add anything more," Shaktikanta Das said on the present state of cryptocurrencies. 

How Valid Are the Concerns of the RBI Governor?

RBI Governor’s major concern regarding cryptocurrencies is that they are bound to interfere with the traditional financial systems, leading to complete decentralization of the economy. However, it is not possible for cryptocurrencies to replace fiat currency completely. 

Cryptocurrency is present in the financial ecosystem as a medium of transacting value. The main reason behind cryptocurrency adoption is the security, speed, reliability, and immutability of blockchain technology. Cryptocurrencies are here not to replace fiat but to compliment traditional finance. Central Bank Digital Currencies are a great example of blockchain innovation revolutionizing traditional finance. 

India is a front-runner in launching its CBDCs and such comments from the RBI governor can shatter the pace of Blockchain innovation in the country. 

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