Reserve Bank of India (RBI) Deputy Governor T Rabi Shankar made a big deal on cryptocurrencies on Monday. Shankar said banning cryptocurrencies is probably the most appropriate option for India. Shankar said this during his address at the 17th Annual Banking Technology Conference and Awards Program of the Indian Banks Association. “We have examined the arguments that advocate that cryptocurrencies should be regulated and we found that none of them stand up to basic scrutiny,” Shankar said.
This statement by the Deputy Governor of RBI assumes significance in the context of the ongoing debate on whether or not to ban cryptocurrencies. The deputy governor also expressed concerns about private cryptocurrencies in the financial system. This is perhaps the first time that a top RBI official is openly calling for a ban on cryptocurrencies.
Das has also expressed concern
Earlier, RBI Governor Shaktikanta Das had highlighted the concerns related to cryptocurrencies, saying that it is detrimental to macroeconomic stability. Also, Das asked investors to be cautious while investing in cryptocurrencies. “I feel it is my duty to tell investors what they are investing in cryptocurrencies. They should keep in mind that they are investing at their own risk,” Das said at a press conference after the Monetary Policy Committee meeting. They should note that these cryptocurrencies do not have any underlying assets.” Let us tell you that the central government has announced 30% tax on private digital assets from the next financial year, but till now has neither legalized cryptocurrencies nor called it illegal.
Cryptocurrencies a threat to financial sovereignty
Shankar said cryptocurrencies pose a threat to a country’s financial sovereignty and make it susceptible to strategic manipulation by the private companies that control these currencies. The deputy governor said, “More importantly, they can ruin the monetary system, the monetary authority, the banking system, and the government in general’s ability to control the economy.
Finance Minister said government and RBI together
At the same time, on Monday itself, Union Finance Minister Nirmala Sitharaman said that the central government and the RBI are working together on cryptocurrencies and other issues. Talking to reporters at the conclusion of RBI’s board meeting, the Finance Minister said that talks were on with the central bank on this matter before the budget and are continuing. The Finance Minister said, “Whatever the government does, we consult and discuss with the RBI.
No Intrinsic Value in Crypto
The Deputy Governor of RBI said that cryptocurrencies cannot be defined as currency, asset or commodity. Shankar said, “Cryptocurrencies have no inherent cash flow, they have no intrinsic value. This should be reason enough to keep cryptocurrencies away from the formal financial system. Additionally, they maintain financial integrity, especially KYC and AML. /CFTs undermine the rules and at least potentially facilitate anti-social activities.” Also Shankar said that crypto-technology is based on a philosophy to avoid government control.He added that cryptocurrencies have been specially developed to bypass the regulated financial system.
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