Indian central bank governor Shaktikanta Das, a long-time opponent of cryptocurrencies, launched a new attack on digital tokens, saying they have no underlying asset and pose a threat to financial stability.
“Investors in cryptocurrency should keep in mind that they are investing at their own risk. They should also keep in mind that the cryptocurrency has no underlying asset, not even a tulip,” the head of the Reserve Bank of India said on Thursday, referring to the bubble in the Dutch tulip bulb market in the 17th century.
Governor Das’s comments come days after the Indian government resolved uncertainty over the legal status of crypto trading. In the February 1 federal budget speech, Finance Minister Nirmala Sitharaman announced high taxes on such transactions, effectively treating them as profits from activities such as gambling which are legal but not encouraged. Waiting for the regulations.
The RBI, for its part, has taken a strong stance against private digital currencies. Since cryptocurrencies are designed to be traded freely and anonymously, the central bank is concerned about capital controls, especially as it has a firm grip on the partially convertible Indian rupee. Issues such as money laundering and terrorist financing have been raised as concerns.
“Private cryptocurrency or whatever name you call it is a major threat to our macroeconomic and financial stability,” Das said.
To mitigate the impact of cryptocurrencies somewhat, RBI is developing its own digital rupee, though Das declined to give a set time frame when it will be ready. In the budget, Sitharaman said a central bank digital currency would be ready sometime in the next fiscal year, which begins April 1.
“We are making progress with CBDCs after researching it carefully and cautiously because there are risks,” he said. “The biggest risk is cybersecurity and the possibility of counterfeiting. We absolutely have to avoid that.”