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In an interview earlier this week, Shaktikanta Das, the governor of the Reserve Bank of India (RBI), issued a cautionary statement on cryptocurrency trading. Das said,
"I'm happy that we sounded those warning signals and I would like to believe that a large number of people would have taken note of the warning signals and the concerns expressed by the Reserve Bank. I would like to believe that many people did not invest in crypto, or sort of pulled out of crypto, thanks to the cautions and concerns that emanated out of the Reserve Bank."
He remarked that cryptocurrencies have a lot of possibilities to cause financial instability when it comes to the central bank's power to set monetary policy. Additionally, it will negatively affect the Indian currency, capital flows, and the banking industry's stability.
Cryptocurrency: A Money Laundering Tool
Das believes that cryptocurrency has the potential to be utilized as a tool for money laundering and unlawful money transfers. The governor of the central bank of India stated,
"[Crypto is] something which doesn't have an underlying [and] the prices will not remain high all the time, so, therefore, it may crash, and it has crashed, ultimately… it is the small investors who lose money, so, therefore, it is a big risk for the small investors."
RBI Governor: Cryptocurrencies Are A Clear Danger
Das stated in July that there is a definite risk associated with cryptocurrencies. He issued a crypto warning in May while the market was falling. After the fall of cryptocurrency Terra (LUNA) and stablecoin TerraUSD (UST), the governor stated that their warnings about crypto have proven to be accurate today.
Ban Of Cryptocurrency in India
RBI recommended the Indian government ban cryptocurrencies like Bitcoin and Ether. Nirmala Sitharaman, the finance minister of India, asserted that international cooperation is essential to regulate and prohibit cryptocurrency successfully. There is presently no clear regulatory framework for cryptocurrencies in India. A crypto law has been under development by the Indian government for several years, but parliament has not yet taken it up. The finance minister recently urged cryptocurrency investors to use precautions as law enforcement looks into many crypto exchanges as part of money laundering investigations.