The governor of India’s central bank stated that the country is not at war with cryptocurrency, but cautioned that unless private cryptocurrencies are forbidden, they will create the next financial disaster.
Details about the RBI Governor Shaktikanta Das warns crypto will cause the next financial crisis
RBI Governor Shaktikanta Das told a conference full of banking executives and parliamentarians that cryptocurrency poses a significant risk to the country’s macroeconomic stability. “After the development of the last year, including the newest episode involving FTX, I don’t think we need to say anything more. Time has demonstrated that cryptocurrency is worth what it is today.”
“Any so-called product’s value fluctuation is a function of the market. But, unlike any other asset or product, our fundamental problem with cryptocurrency is that it has no underpinning. “I believe crypto or private cryptocurrency is a trendy way of presenting what is essentially a very speculative endeavor,” Das remarked.
According to Das, the premise behind crypto is that it bypasses or breaks the present financial system. “They don’t trust in the central bank, they don’t believe in a regulated financial world. “I have yet to hear a solid explanation about what public purpose it serves,” he remarked, adding that he believes crypto should be banned.
“It should be forbidden because allowing it to grow implies that it is regulated and permitted to expand; please mark my words that the next financial catastrophe will be caused by private cryptocurrencies,” he stated.
India is one of the countries that has taken a strict stance on cryptocurrencies. It began taxing virtual currencies earlier this year, imposing a 30% tax on earnings and a 1% deduction on each crypto transaction.
The country’s stance, combined with the market collapse, has drastically depleted the transactions processed by local exchanges CoinSwitch Kuber, supported by Sequoia India and Andreessen Horowitz, and CoinDCX, backed by Pantera.
Changpeng “CZ” Zhao, founder and CEO of Binance, told TechCrunch in a recent interview that the company does not see India as a “very crypto-friendly environment.” He added that the company is attempting to relay its concerns to the local authority about local taxation, but that tax policies typically take a long time to change.
“Binance travels to countries with pro-crypto and pro-business regulations. “We don’t travel to nations where we won’t have a sustainable business or any business, whether we go or not,” he explained.
Coinbase, which has supported both CoinDCX and CoinSwitch Kuber, debuted its cryptocurrency platform in the country earlier this year but swiftly shut it down due to regulatory concerns. Coinbase co-founder and CEO Brian Armstrong stated in May that the company had discontinued support for local payments via UPI “due to some informal pressure from the [central bank] Reserve Bank of India.”
“Crypto ended 2021 with the story that finance, as we know it, was slow, inefficient, and cumbersome. Defi and DAOs were the way to go. In crypto parlance, prices were mooning, and investors were HODLing. Since May 2022, cryptos have lost two-thirds of their luster. Failure of some companies has caused the ecosystem to unravel,” said T. Rabi Sankar, deputy governor of the Reserve Bank of India, who once compared cryptocurrency to tulips and Ponzi schemes.
“The basic ideology of crypto, which was welcomed as the end of government, regulators, and middlemen, is now feverishly striving to be regulated,” he stated.