Reserve Bank of India (RBI ) Governor Shaktikanta Das on Wednesday warned the public against crypto trading, stating that it poses an "inherent risk" to the country's macroeconomic and financial stability.
Speaking at the BFSI Insight Summit 2022, organised by the Business Standard, Das said the next financial crisis could come from cryptocurrency if it grows. The RBI governor highlighted the high volatility of these assets, stating that cryptocurrency is now worth $140 billion, a loss of around $40 billion this year.
He raised three main concerns with cryptocurrency . Firstly, private cryptos owe their origin to 'breaking the system,' and they do not believe in the regulated financial world.
Secondly, cryptocurrency has no underlying basis, and there is no clarity on what public good or purpose they serve. Thirdly, it's a 100 per cent speculative activity, making it a risky asset.
"Cryptocurrency has certain huge inherent risks for our macroeconomic and financial stability. However, after looking at the latest episode of FTX, I don't think we need to say anymore," Das said.
He said the government is "equally serious" about combating inflation .
Finance Ministry’s Views On Crypto
Minister of State (MoS) for Finance Pankaj Chaudhary told Lok Sabha that crypto assets are borderless and require international collaboration to prevent regulatory arbitrage.
“Therefore, any legislation on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” Chaudhary said in a written reply to a question on a crypto bill.
The minister said the government is considering a policy regarding crypto assets and the related ecosystem. Responding to a separate question, the minister replied the government does not register crypto exchanges.
Any regulation to ban cryptos would be effective only with significant international collaboration on the evaluation of the risks and benefits, Chaudhary added.