India’s RBI chairman fears crypto might cause a financial disaster

Governor of the Reserve Bank of India Shaktikanta Das cautioned that if crypto is regulated and allowed to develop, it might trigger the next financial crisis.

Shaktikanta Das, the governor of the Reserve Bank of India (RBI), did not mince words while addressing the crypto sector at a recent conference, stating that “private” crypto would be the cause of the next financial disaster.

Das argued on December 21 at the Business Standard BFSI Insight Summit that private cryptocurrencies — those not issued by banks or governments — are backed by nothing and are merely speculation tools.

“They have no intrinsic worth. They pose substantial threats to our economic and financial stability. “I have yet to hear a convincing explanation about the public benefit or function it serves,” he remarked.

Das went on to propose that a complete ban on cryptocurrencies in India would be the wisest course of action going ahead.

“It [private cryptocurrency exchange] is a purely speculative activity, and I continue to believe it should be forbidden… Because, if it is allowed to expand, if you attempt to control it and allow it to flourish, private cryptocurrencies will trigger the next financial disaster.”

The chairman of the RBI cited the recent FTX collapse, which was overseen by the recently extradited Sam Bankman Fried, as an example of such a danger.

After the events of the last year, particularly the most recent instance involving FTX, he added, “I don’t believe we need to expand on our position any more.”

These remarks represent yet another instance in which a prominent figure in politics or finance has blamed the crypto sector for FTX’s demise, with many U.S. senators in particular smashing digital assets in recent weeks.

Naturally, Das talked far more positively about central bank digital currencies, highlighting that the RBI is actively working to launch its digital rupee.

Historically, the RBI has viewed cryptocurrency with scepticism and questioned its worth on many occasions. As of June, the bank had rated the industry at the bottom of its list of systemic concerns, thus Das’s most recent remarks demonstrate that the mood is deteriorating.

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