A deputy governor of the Reserve Bank of India (RBI) talked about cryptocurrencies and called them similar to Ponzi schemes. The governor of the central bank in India said that it is not possible to regulate cryptocurrencies. He said that regulating them would be futile and banning them was a better option. T. Rabi Sankar expressed his views about cryptocurrencies at his keynote address on Monday at the 17th Annual Banking Technology Conference and Awards of the Indian Banks Association. He believes that Indian crypto policy should take into account that cryptocurrencies cannot be defined as an asset, currency, or commodity.
According to the governor, cryptocurrencies are lacking in intrinsic value and underlying cash flows and are quite similar to Ponzi schemes. In fact, he said that they could even be worse. Sankar also talked about crypto regulation and said that its proponents should stop trying to get the asset class regulated. He insisted that they had listened to the arguments presented by those advocating regulation of cryptocurrencies and had discovered that they cannot stand up to even basic scrutiny. He emphasized that regulating cryptocurrencies would prove to be futile.
He stated that cryptocurrencies are certainly not financial assets, currencies or even real assets, or digital assets. Therefore, he added that no financial sector regulator would be able to regulate them. He went on to say that it wasn’t possible to do so because cryptocurrencies cannot be defined. As far as the purpose of cryptocurrencies is concerned, the governor stated that their aim was to bypass the existing financial system and the government, on a larger scale. He opined that cryptocurrencies are decentralized and anonymous systems that operate only virtually and this makes them very attractive for conducting illegitimate and illegal transactions that have mostly been filtered out of the formal financial system.
Once he had highlighted the various reasons for imposing a ban on cryptocurrencies, he concluded that banning this asset class was the wisest move for India. Meanwhile, he stated that blockchain technology does hold a lot of potential and he further said that he doesn’t believe this technology needs cryptocurrencies like bitcoin to flourish. Sankar said that central authentication of transactions can be done, then there would no longer be any need for any native cryptocurrencies for using the technology. This statement from the Indian central bank’s governor echoes the one made in the previous week by Shaktikanta Das, the RBI Governor.
The Governor of the central bank in India had said that cryptocurrency was lacking any value, even that of a tulip. Das went on to say that these private cryptocurrencies were actually threatening the country’s macroeconomic as well as financial stability. He said that they would also undermine the ability of the Indian central bank to deal with issues of macroeconomic and financial stability. The central board of directors of the RBI had stated back in December that they were in favor of imposing a complete ban on cryptocurrencies and added that a partial ban would not be effective.