T Rabi Sankar, Deputy Governor of RBI has shared his views on cryptocurrency. He was giving keynote address at Indian Banks Association 17th Annual Banking Technology Conference and Awards Monday. He said, “Cryptocurrencies are not amenable to definition as a currency, asset or commodity. They have no underlying cash flows, they have no intrinsic value. They are akin to Ponzi schemes or may even be worse.”
Sankar dismissed the idea that cryptocurrencies should be regulated and have spoken against people who were suggesting the idea. He said, “We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated and found that none of them stand up to basic scrutiny.”
He gave further explanation, “Cryptocurrencies are not currencies or financial assets or real assets or even digital assets. Therefore, it cannot be regulated by any financial sector regulator. It is not possible to regulate something that one cannot define.” He further added, “The class of crypto products are fundamentally designed to bypass the established financial system, and on a larger scale government itself.”
Deputy Governor expressed his concerns and said, “The fact that they are anonymous, decentralized systems that operate purely virtually makes cryptocurrencies particularly attractive to illegal, illegitimate transactions which have been largely filtered out of the formal financial system.”
He concluded his address with a note that the best choice that India has in this matter is banning of all cryptocurrencies. The statements given by T Rabi Sankar are not very far from opinion of Shaktikanta Das, Governor of RBI. Mr Das said few days back that cryptocurrency has no underlying, not even a tulip. He said that, “Private Cryptocurrencies or whatever name you call it are a threat to our macroeconomic stability and financial stability. They will undermine the RBI’s ability to deal with issues of financial stability and macroeconomic stability.”
In a meeting held in December between central board of directors of RBI it was concluded that crypto should be completely banned in India. A partial ban on cryptocurrencies won’t work for a long time.