T Rabi Sankar, who took over as the Deputy Governor of the Reserve Bank of India, has called for an outright ban on cryptocurrencies. “Banning cryptocurrency is perhaps the most advisable choice open to India,” Sankar said during his keynote address at Indian Banks’ Association (IBA’s) Annual Banking Technology Conference & Awards on February 14. The deputy governor has called for a complete ban on cryptocurrencies.
“Crypto-technology was underpinned by a philosophy to evade government controls.”
“We have examined arguments by those advocating cryptos should be regulated and found that none of them stand up to basic scrutiny,” the deputy governor of the central bank said. Sankar said crypto-technology was underpinned by a philosophy to evade government controls and has been specifically developed to bypass regulated financial systems–especially the Know-Your-Customer regime and AML/CFT regulations (anti-money laundering and counter-terrorism financing). “These should be reasons enough to treat them with caution,” he added.
The RBI deputy governor compared with Ponzi schemes.
The deputy governor likened cryptocurrencies to “Ponzi schemes, and may even be worse.” Cryptocurrencies can and, if allowed, most likely will “wreck the currency system, the monetary authority, the banking system, and in general the government’s ability to control the economy,” Sankar said. He added that crypto messaging does not appear to be directed at the rational or sensible.
“It would serve us well if understanding of cryptos goes beyond the hype and gets rooted in reason, pragmatism,” he said. After the monetary policy meeting earlier in February, RBI Governor Shaktikanta Das had also warned investors to keep in mind that they are investing in volatile assets at their own risk.