New Investors Stacking Up on Cryptocurrencies May be “Exaggerated”- RBI Governor

The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, said that the influx of new investors into the digital currency ecosystem may be “exaggerated.” Das made this stance known in a comment to Business Standard, in which he also reiterated that cryptocurrencies are gradually posing “a very serious concern” to the country’s financial stability.

As reported by the Economic Times of India, the concerns are emanating from a macroeconomic and financial stability perspective. The use of digital currencies in transactions is being widely viewed as a risk to most economies as it can remarkably reduce bank deposits, and the ability of financial institutions to make lending decisions.

While the attainment of this level of threat is still very far away, most central banks around the world are notably taking caution, mostly through the development of a Central Bank Digital Currency (CBDC). Besides the threats to the financial stability of the country, the RBI Governor is also particularly concerned about the inflated figures bordering on the number of individuals who are taking positions by investing in cryptocurrencies.

The banking veteran noted that “Perhaps there is an effort to enroll as many people as possible.”

Concerns Duly Voiced by the RBI Governor 

According to the RBI Governor, the shared concerns have been made known to the Federal Government for probable intervention. It is worth noting that the regulatory climate surrounding cryptocurrencies in India is largely unclear, with the RBI once banning the burgeoning asset class. 

Trading of digital currencies has thrived in India thus far, thanks to the upliftment of the ban by the country’s Supreme Court in 2020. Seeing the current growth and anticipation in the market, relevant market regulators are now making preparations to regulate the nascent asset class as commodities.

The Reserve Bank of India also has its eyes on floating its CBDC sometime in the future, just as its closest neighbor China is advancing its Digital Renminbi pursuits. Perhaps, the advent of the government-backed Rupee pegged token can help mitigate the growing proliferation of privately issued digital currencies. While all of India’s moves into the CBDC race and crypto regulations are still taking shape, it may become largely difficult to strip exchanges and citizens away from the market they are growing to love.

In the meantime, the anticipated crypto regulation is billed to have provisions for all aspects of the market evolution, including Non-Fungible Tokens (NFT) as reported earlier by TheCoinRise.