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India's Central Bankers Ring Danger Bells On Crypto, Yet Again


coingape.com 30 June 2022 12:22, UTC
Reading time: ~2 m

After reiterating the Reserve Bank of India’s (RBI) stance on cryptocurrencies last month, Governor Shaktikanta Das has in Thursday made a new comment. When the crypto market collapsed last month thanks to the Terra meltdown, Das made a similar statement.

Crypto Is ‘Clear Danger’

Investors were warned against volatility in crypto, he said at the time, when several investors lost money due to the crash. On Thursday, Das said cryptocurrencies are a dangerous territory to enter for investors due to their speculative nature.

The RBI Governor stated that the asset class is a ‘clear danger‘. He further said that we must be mindful of the emerging risks on the horizon.

“We must be mindful of the emerging risks on the horizon. Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation.”

He indicated that the speculation in crypto is going on “under a sophisticated name.”

Cyber Risks Need Special Attention: RBI Governor On India Crypto Space

Das explained that technology’s potential to disrupt financial stability should be prevented. He however acknowledged that technology has supported the reach of financial sector and that its benefits must be fully harnessed.

“While technology has supported reach of financial sector & its benefits must be fully harnessed, its potential to disrupt financial stability has to be guarded against. As financial system gets increasingly digitalized, cyber risks are growing and need special attention.”

Speaking in the backdrop of the Terra crash last month, the RBI Governor explained the difficulties in regulating the space. Regulating cryptocurrencies is a difficult task as they have an underlying value, he said at the time.

Earlier, Das described the crypto space as a threat to macroeconomic and financial security. Cryptocurrency is privately created and it is a threat to our financial and macroeconomic stability, he said.

“Investors should keep in mind that they are investing at their own risk. The cryptocurrency has no underlying, not even a tulip, he added.”

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