Reserve Bank of India Governor Shaktikanta Das has no love for crypto. In truth, he desires to eliminate it through an outright ban, saying that these “are nothing but gambling.”
Das said in his speech at a conference on Friday that RBI’s stance on cryptocurrency stays unchanged.
The bank official disclosed that digital currencies can’t be regarded as a financial product and should be treated like “gambling activities.”
The RBI has been vocal about its opposition to such currencies and in addition took a lead over other central banks by launching its own central bank digital currency (CBDC) late last October.
RBI Governor Shaktikanta Das. Image: NDTV
Why RBI Governor Wants To Get Rid Of Crypto
Das explained further why he wants an outright ban on cryptocurrencies. He said that besides the commonly known danger of terror funding related to these asset types, their definition could be very unclear.
“Some people call it as an asset, while others call it as a financial product and if that be the case, it has to have some underline,” he said. “Within the case of crypto, there isn’t a underline.”
Bitcoin is a hot topic in India, but the federal government isn’t taking it calmly. In a recent statement, the RBI said:
“Crypto just isn’t a financial product then, subsequently it’s masquerading as a financial product or asset is totally a misplaced argument.”
The RBI’s official stance on bitcoin comes after reports that the system implemented by the now-defunct exchange FTX has failed. The report also mentioned that there are rumors concerning the RBI’s plans to ban digital currency in India.
Nevertheless, on the macro-level, the RBI governor said:
“Cryptocurrencies have the potential to develop into a way of exchange for doing a transaction. Most of it’s dollar denominated and if one allows it to grow, which implies 20 percent of the transactions is going on through crypto, meaning it just isn’t happening by the central bank and it’s issued by private corporations all around the world.”
If this happens and other people start using crypto as a substitute of dollars —and so they do — then RBI will lose control over the cash supply within the economy.
On Bitcoin & The US Dollar’s Influence
Some analysts say that if bitcoin were truly a financial product, then there can be specific rules for it. And that’s simply not the case.
Crypto total market cap at $922 billion on the weekend chart | Chart: TradingView.com
In truth, most digital currencies are dollar-denominated. Which means they’re used to make transactions with fiat currency, which implies they’re not issued by central banks and so they’re not used to regulate money supply within the economy. And that implies that the RBI has lost control over it.
Meanwhile, warning that legalizing bitcoin will increase dollarization of the economy, Das stated that the claim that digital assets disguised as a financial product or financial asset is utterly mistaken.
-Featured image by The Youth