The Deputy Governor of the Reserve Bank of India, T Rabi Sankar addressed cryptocurrencies and India’s reluctance towards them. While speaking at an Indian Banks Association event on Monday, February 14, said that it has been seen that crypto-technology is underpinned by a philosophy to evade government controls. Cryptocurrencies have been developed especially to bypass the regulated financial system. According to him, these should be reasons enough to treat them with caution.<\/p>\n\n\n\n
He added that cryptocurrencies are not amenable to definition as a currency, asset or commodity. They have no underlying cash flows, they have no intrinsic value. Rabi Sankar compared cryptocurrencies with Ponzi Schemes and said that the former may even be worse.<\/p>\n\n\n\n
Significantly, he stated, it may be beneficial to advanced economies if cryptocurrencies replace emerging market currencies since this would provide advanced economies stronger strategic influence over emerging market economies. He went on to say that cryptos are mere gambling instruments.<\/p>\n\n\n\n
On the question of whether banning cryptos will cause investors’ capital to erode, the deputy governor stated that banning cryptos in India does not imply that investors will lose money since a viable exit may be offered. Furthermore, he stated that crypto investors were fully conscious of the risks involved.<\/p>\n\n\n\n
He also stated that establishing native cryptocurrencies is only one method of deploying a blockchain and that it is only one use of the technology. To suggest that banning cryptocurrencies will stifle blockchain technology adoption is equivalent to claiming that banning human cloning would stifle biotechnology progress or that banning nuclear weapons would harm nuclear physics as a field.<\/p>\n\n\n\n