Cryptocurrencies Are A Clear Danger: RBI Governor

RBI governor Shaktikanta Das has described cryptocurrencies as “a clear danger.”

Not stoked about crypto: India’s central bank has been voicing its concern about cryptocurrencies for years.

• In 2018, the RBI had barred entities regulated by it from dealing in such instruments.

• The Supreme Court, however, struck down the ban about two years later.

• Earlier this year, Das called cryptocurrencies a "threat to macroeconomic and financial stability", just over a week after the budget presentation.

• Budget 2022-23 proposed 30 per cent tax on gains made from cryptocurrency trades.

• From today, a tax deductible at source of 1 per cent on all digital-asset transfers above a certain size takes effect.

Financial Stability Report: The RBI governor penned the foreword to the 25th issue of the report, released on 30 June.

• Das brought attention to cyber risks in an increasingly digitalised world.

• “Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name,” he said.

• Acknowledging the potential and impact of technology in expanding financial reach, Das said the technology’s ability to disrupt financial stability must be guarded against.

• Das has often voiced concerns about investing in cryptocurrencies. He has said it is his “duty” to do so.

Not doing too well: Cryptocurrencies have witnessed massive volatility amid global uncertainties recently.

• Cryptocurrencies are seen as a highly speculative asset.

• “...many will have invested in cryptocurrencies because they believed it would make them richer. This belief has no doubt been shaken,” researchers wrote around mid-May in The Conversation, after the crypto crash.

• “The global cryptocurrency market cap has fallen by over $2 trillion after touching the $3 trillion mark in November last year,” a Financial Express report noted.

• “We have been cautioning against crypto and look at what has happened to the crypto market now. Had we been regulating it already, then people would have raised questions about what happened to regulations," Das told CNBC-TV18 in an interview.

What’s next: The government is working on a consultation paper on cryptocurrencies after speaking to various stakeholders and institutions like the World Bank and IMF.