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According to India's RBI head, Crypto could spark the next financial crisis.

Adding to the same comments, Das said that the wisest course of action would be for India to prohibit cryptocurrencies completely.

Photo by Naveed Ahmed / Unsplash

Shaktikanta Das, governor of the Reserve Bank of India, cautioned that if cryptocurrencies remain unregulated and are given room to develop, they might be the cause of the next financial disaster.

The statement

The governor of the Reserve Bank of India (1) spoke bluntly about the cryptocurrency industry at a recent conference and said that "private" crypto would cause the subsequent financial disaster. On December 21 (2), Das claimed that private cryptocurrencies, or those that banks or governments do not issue, are unbacked and are just meant to be used for speculation. Das was speaking at the Business Standard BFSI Insight Summit.

"They have no intrinsic worth. They carry significant inherent hazards to the health of our financial and macroeconomic systems. I have not yet heard a convincing explanation concerning what public benefit or purpose it serves, " he said.

What could trigger the next crisis?

Adding to the same comments, Das said that the wisest course of action would be for India to prohibit cryptocurrencies completely: Private bitcoin trades are speculative and should be outlawed. Because if you attempt to control it and let it flourish, the next financial catastrophe will be caused by private cryptocurrencies, so please take note. The RBI chairman cited the recently-extradited Sam Bankman Fried-led collapse of FTX as an illustration of this risk.

They don't necessarily need to say anything further on their position following the occurrences over the last year, including the most recent incident with FTX. With numerous U.S. senators, in particular, using the opportunity to criticize digital assets over the past few weeks, these remarks indicate yet another occasion in which a prominent figure in politics or finance has blamed the crypto industry for FTX's fall. As he stressed that the RBI is currently working on launching its digital rupee, Das naturally talked in much more favorable terms of Central Bank Digital Currencies (CBDCs).

"India has been in the vanguard of the digital revolution in the current century, and you will see in the days to come that more and more central banks will adopt digital currencies, he said.

The RBI has frequently questioned the value of cryptocurrencies and maintained a chilly attitude toward them. Das' most recent remarks demonstrate that the situation is only worsening because, as recently as June, the bank had rated the industry at the bottom of its list of systemic concerns.