RBI Governor Shaktikanta Das: Crypto is poor gambling; shouldn't be allowed to grow

RBI Governor Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das on 13 January repeated his caution against crypto assets in the Indian economy. Das said crypto is poor gambling and will even undermine the power of the central bank if allowed to grow unchecked.

“If crypto is allowed in India, RBI will lose control over monitoring transactions," said Das speaking at an event in Mumbai, adding it doesn’t have any underlining assets. Crypto masquerading as a financial asset is a completely misplaced argument, Das said.

Any assets without an underlying, whose valuation is dependent on make belief is nothing but 100 percent speculation, the RBI governor said.

“The so-called crypto assets have the potential to become a means of exchange. If you allow it to grow, assuming 20% of transactions in the economy through crypto, which is not issued by the central bank, the RBI being the monetary authority will lose control over the money supply in the economy,” Das said.

The central bank has been warning against cryptocurrencies for a long and has openly called for a ban. The Government is yet to take a call on the legality of crypto assets in India.

RBI’s ability to decide the liquidity that needs to be maintained will get undermined if Crypto dominates the transactions, Das said.

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“One year ago, we said this whole thing is likely to collapse sooner than later. Looking at the developments of last year, I don’t think I need to add anything more,” Das said.

‘To put it bluntly, Crypto is gambling,’ Das said.

RBI and government on crypto

In 2013, RBI issued a circular where it warned traders against the use of virtual currencies. It asked traders to stay away from cryptocurrency trading and warned about the risks associated with it.

Later in 2017, RBI and the finance ministry issued a warning that virtual currencies are not legal tender.
The regulator has constantly informed about the risks concerning trading and also thought of introducing a blanket ban on them in 2018.

In May 2022, when RBI announced its intent to launch an official digital currency, Governor Das said cryptocurrencies pose a serious threat to any financial system as they are not under its regulation.