Making a strong strike on Cryptocurrency, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar on Monday asserted banning cryptocurrency is “perhaps the most advisable choice open to India.” Sankar announced this while talking at the Indian Banks Association 17th Annual Banking Technology Conference and Awards.
Sankar told that agencies have assessed the arguments proposed by those advocating that cryptocurrencies should be governed and found that none of them stands up to fundamental scrutiny. The comments are crucial in the context of the constant debate on whether to ban cryptocurrencies or not. The deputy governor recited different factors to highlight the problems caused by private cryptocurrencies in the financial system. This is perhaps the first time an RBI top official is openly putting together a call to ban Cryptocurrencies.
Earlier, the RBI governor Shaktikanta Das has underlined the concerns related to Cryptocurrencies saying these instruments are dangerous to the macroeconomic stability. Also while speaking at the post-monetary policy presser, Das questioned investors to be cautious while investing in Cryptocurrencies. “I think it is my duty to tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip,” Das told during the MPC press meet.
The Union government has declared a 30% tax on private digital assets from the next fiscal year but has so far denied making cryptocurrencies legal or illegal. Sankar announced Cryptocurrencies urge the financial sovereignty of a country and make it vulnerable to strategic manipulation by private corporates creating these currencies or Governments that prevent them.
However, the deputy governor asserted that more substantially, they can (and if allowed most likely will) damage the currency system, the financial authority, the banking system, and in general Government’s ability to control the economy.
Sankar announced cryptocurrencies are not amenable to an explanation as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; they are akin to Ponzi Schemes, and may even be terrible. Further, Rabi Sankar asserted that crypto-technology is underpinned by a philosophy to shirk Government controls.