Speaking at a financial stability forum, Das emphasized that cryptocurrencies lack underlying value and are highly volatile, making them unsuitable for the country’s financial system.
Das’s comments echo the RBI’s long-standing skepticism towards cryptocurrencies. The central bank has consistently expressed concerns about the potential risks associated with digital currencies, including their use for illicit activities, money laundering, and terrorist financing.
The RBI Governor noted that cryptocurrencies are not backed by any tangible assets and their value is driven solely by speculation. This, Das argued, makes them vulnerable to sharp price fluctuations, which can have far-reaching consequences for investors and the broader financial system.
Das also highlighted the lack of regulatory oversight and the anonymity associated with cryptocurrency transactions, which can facilitate illicit activities. He emphasized that the RBI’s primary concern is to ensure the stability of the financial system and protect the interests of investors.
The RBI has been exploring the possibility of introducing a central bank-backed digital currency (CBDC) as an alternative to private cryptocurrencies. Das confirmed that the central bank is actively working on the CBDC project, which will provide a secure, efficient, and regulated digital payment option.
The Indian government has also been grappling with how to regulate cryptocurrencies. The Finance Ministry has proposed a bill to ban private cryptocurrencies, while allowing for the creation of a digital rupee. However, the bill is still pending, and the regulatory environment for cryptocurrencies remains uncertain.
Das’s comments come amid growing global concerns about the risks posed by cryptocurrencies. Many countries, including China, have taken steps to restrict or ban cryptocurrency trading. The International Monetary Fund (IMF) has also warned about the potential risks of cryptocurrencies to financial stability.
In India, cryptocurrency trading has gained significant traction, with many platforms operating in the country. However, the lack of clear regulations has created uncertainty for investors and traders. Das’s comments serve as a reminder of the RBI’s cautious approach towards cryptocurrencies and the need for robust regulations to mitigate potential risks.
The RBI’s stance on cryptocurrencies is likely to influence the government’s decision on regulating digital currencies. As the central bank continues to work on its CBDC project, investors and traders will be watching closely for any developments on the regulatory front.
