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.
A deputy governor of the Reserve Bank of India (RBI), T. Rabi Sankar, shared his view on cryptocurrency and what Indian crypto policy should be during his keynote address at the Indian Banks Association 17th Annual Banking Technology Conference and 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:
Cryptocurrencies are not currencies or financial assets or real assets or even digital assets. Therefore, it cannot be regulated by any financial sector regulator. It is not possible to regulate something that one cannot define.
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 highlighting numerous reasons why cryptocurrency should be banned, he concluded:
All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India.
Meanwhile, the RBI deputy governor sees potential in blockchain technology and does not believe that cryptocurrencies, like bitcoin, are needed for the technology to thrive.
“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.
What do you think about the comments by RBI Deputy Governor Sankar? Let us know in the comments section below.
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