RBI Governor Shaktikanta Das reiterated his caution about crypto assets in the Indian economy on 13 January. According to Das, cryptocurrencies are a bad bet and might even weaken the authority of the central bank if they are allowed to continue growing uncontrolled.
“RBI’s position is very clear, it should be banned, all of them”, Mr Das said at the Business Today Banking and Economy Summit. “The technology of blockchain needs to be supported”, the Governor added.
For Shaktikanta Das, there is no underpinning in the case of cryptocurrency, except from the well-known risks of money laundering, terror financing, and so on.
“What’s crypto? Some call it an asset, some call it a financial product. There is no underlying problem in the case of crypto”, Mr Das explained. “Anything without any underlying, whose valuation is dependent entirely on belief is nothing but 100 per cent speculation or to put it bluntly, it’s gambling,” he explained.
The RBI Governor elaborated by positing a future in which 20% of all transactions are conducted using cryptocurrency (in India). To argue that cryptocurrency is a financial product or asset is to miss the point entirely. So-called crypto-assets have the makings of a decentralised currency since they use cryptography to secure transactions. Moreover, the vast majority of it is expressed in dollars.
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The Reserve Bank of India (RBI) will lose control over twenty percent of the economy's transactions if twenty percent of those transactions are conducted in cryptocurrencies that were not issued by the RBI. The power of central banks to control the money supply, or monetary policy, will be weakened. Mr Das predicted that this would cause the economy to become dollarized.
