- RBI deputy governor calls for the ban, and not regulation, on cryptocurrency.
- Sankar claims crypto will destabilize the macroeconomic stability of the country.
- India’s debate on crypto legalization or banning is still ongoing.
On Feb. 14, Reserve Bank of India’s Deputy Governor T. Rabi Sankar called for the complete ban on cryptocurrency before his fellow bankers.
The statement comes days after the Union Budget proposed taxing cryptocurrencies which gave rise to concerns amongst other financial experts. During his speech, Sankar drew a parallel between Ponzi schemes and cryptocurrency, and said banning it is the “most advisable choice” for the Government of India.
Sankar noted that giving cryptocurrency the opportunity to exist in a country where fiat money is prevalent, “a destabilizing effect on the monetary and fiscal stability of a country” would be inevitable. He further added that regulating crypto would result in it becoming an investment asset, making it more valuable and nicking away more users of Rupee.
The deputy governor disputes the true value of cryptocurrencies, stating:
Unlike the value of Rupee, which is anchored by monetary policy and its status as legal tender, the value of crypto assets rests solely on the expectation that others will also value and use them.
The RBI official stresses that simply regulating cryptocurrency would encourage its use within the foundation laid out by the government. Sankar is aware, however, that crypto patrons will still support its use despite imposing a ban on the use of virtual currency, the same as “drug trafficking is a rampant phenomenon despite a ban.
India is one of the nations where blockchain companies and legislators have an ongoing debate regarding cryptocurrency regulations. In the meantime, the decision to legalize or ban the use of cryptocurrency is still in a state of prolonged regulatory limbo as finance minister Nirmala Sitharaman assures further discussions regarding the matter.