Shaktikanta Das, Governor of the Reserve Bank of India, has warned that if cryptocurrency is regulated and allowed to grow, it could cause the next financial meltdown.
Shaktikanta Das, governor of the Reserve Bank of India (RBI), did not mince words when discussing the crypto sector at a recent conference, claiming that “private” crypto will be the cause of the next financial crisis.
Das argued at the Business Standard BFSI Insight Summit on December 21 that private cryptocurrencies — those not issued by banks or governments — are unbacked and are merely tools for speculation.
“They have no intrinsic value. They pose significant threats to our macroeconomic and financial stability. “I have yet to hear a convincing argument about what public good or public purpose it serves,” he said.
Adding to those sentiments, Das went on to suggest that a full-scale crypto ban in India would be the best course of action in the future:
“It [private cryptocurrency trade] is entirely speculative, and I continue to believe that it should be prohibited… because, if it is allowed to grow, if you try to regulate it and allow it to grow, please mark my words, the next financial crisis will be caused by private cryptocurrencies.”
The RBI chief cited the recent FTX implosion led by the recently extradited Sam Bankman Fried as an example of such risk.
“I don’t think we need to say anything else about our position after the events of the last year, including the most recent episode involving FTX,” he said.
Such remarks are yet another instance in which a key figure in politics or finance has blamed the crypto sector for FTX’s demise, with many U.S. senators, in particular, seizing the opportunity to slam digital assets in recent weeks.
Das, of course, spoke much more favourably of central bank digital currencies, emphasising that the RBI is actively pursuing the launch of its digital rupee.
“In the coming days, you will see more and more central banks embrace digital currencies, and India has been at the forefront of the digital revolution in the twenty-first century,” he said.
The RBI has previously expressed scepticism about cryptocurrency and questioned its value on several occasions. Das’ latest remarks indicate that sentiment is deteriorating, as the bank previously ranked the sector at the bottom of its list of systemic risks in June.