Crypto Will Undermine the Authority of the RBI, Says Governor

Many central banks including the Reserve Bank of India (RBI) hold a variety of reasons why crypto assets should either be introduced, regulated, or outrightly banned from their economy.

For India, an outright ban seems to be a preferable option and the governor of the RBI has given a ton of reasons why the asset class should be avoided. More recently, he has said that cryptocurrency will sabotage the activities of the RBI. 

Shaktikanta Das, the RBI governor said that digital currencies like Bitcoin (BTC) and Ethereum (ETH) “will undermine the authority of the RBI and lead to the dollarization of the economy,” thereby reducing the usage of the Indian rupee. 

He believes that as the highest financial authority in the region, the RBI could lose its control over the money supply in India if this eventually happens.

During the Business Today Banking and Economy Summit which was held on Friday, Das reiterated that the central bank is still standing on its opinion of a complete ban on cryptocurrencies. 

Attempting to explain that this asset class has no underlying value, the RBI governor said;

“Some people call cryptocurrency an asset, some call it a financial product, but every asset or financial product needs to have an underlying value. But cryptocurrency does not have any underlying value,” insinuating that its value is based on make-believe and speculation more like in the case of gambling which is highly prohibited in India.

Crypto With no Underlying Value

The implosion of FTX has made RBI emphasize on the need to kick out crypto just like other regions trying to be cautious around the digital asset class. 

In December, Das spoke to some banking experts and lawmakers telling them about the several risks which cryptocurrency holds. He placed priority on the macroeconomics and stability of the nation citing that the next financial crisis would be contributed by crypto.

“Change in value in any so-called product is the function of the market. But unlike any other asset or product, our main concern with crypto is that it doesn’t have any underlying whatsoever. I think crypto or private cryptocurrency is a fashionable way of describing what is otherwise a 100% speculative activity.”