A deputy governor of India’s central bank, the Reserve Bank of India (RBI), likens cryptocurrencies to Ponzi schemes, emphasizing that they cannot be regulated. “It would be futile to regulate cryptocurrencies,” he claims, stating that they should be banned.
RBI’s Deputy Governor Sees Crypto Ban as ‘the Most Advisable Choice Open to India’
T. Rabi Sankar was the deputy governor of Reserve Bank of India (RBI) and shared his thoughts on crypto during the keynote address of Indian Banks Association’s 17th Annual Banking Technology Conference & Awards, Monday.
“Cryptocurrencies are not amenable to definition as a currency, asset, or commodity,” the deputy governor said, adding:
They have no underlying cash flows, they have no intrinsic value … they are akin to Ponzi schemes, and may even be worse.
Regarding cryptocurrency regulation, Sankar dismissed crypto proponents’ suggestion that the asset class should be regulated.
“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 insisted.
Emphasizing that “It would be futile to regulate cryptocurrencies,” he explained:
The cryptocurrencies do not include currencies, financial assets or digital assets. It cannot therefore be regulated or supervised by financial regulators. You cannot regulate what you don’t know.
Regarding the purpose of cryptocurrency, Sankar believes, “The class of crypto products are fundamentally designed to bypass the established financial system, and on a larger scale government itself.”
He opined: “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.”
After listing numerous reasons for cryptocurrency being banned, he said:
These factors all lead us to conclude that India’s best option is to ban cryptocurrency.
The RBI deputy governor does see potential in Blockchain technology, but does not think that cryptocurrency, such as bitcoin, is necessary for it to succeed.
“It should be possible to maintain a blockchain without any native cryptocurrency if transactions are authenticated centrally,” Sankar said.
Sankar’s statement echoes a similar one made last week by RBI Governor Shaktikanta Das, who declared, “Cryptocurrency has no underlying, not even a tulip.” Das also warned: “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 December, the RBI’s central board of directors also said that it favors a complete crypto ban, noting that a partial ban will not work.
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