While the cryptocurrency industry continues to grow despite occasional setbacks, not everyone agrees with the burgeoning asset class, and some even warn of a major financial crisis if digital assets are allowed to thrive.
Central bank of India: Cryptocurrencies could cause the next financial crisis!
One of these opponents is Shaktikanta Das, the head of the Reserve Bank of India, who has expressed concerns about the rapid growth of crypto assets and warned that this could lead to the next financial crisis, Times of India reported on Dec.
Speaking at the Business Standard BFSI Summit, he said:
“This is 100% speculative activity and I still hold the view that it should be banned because if it is allowed to grow, please mind my words, the next financial crisis will come from private cryptocurrencies.”
Questioning crypto’s intentions
In addition, Das added that the lack of crypto regulation by central banks poses a great inherent risk to the macroeconomic and financial stability of countries, adding that the main purpose of digital assets is to “bypass or disrupt the system.”
On top of that, the head of the central bank of India brought up the collapse of cryptocurrency, voicing the view that crypto creators “do not believe in central bank currency, the world of regulated finance and all they want is to bypass and defeat the system.” An example of this threat is crypto trading platform FTX.
Das finally came to the following conclusion:
“I have not heard a convincing argument for what public interest they serve. This is a 100% speculative activity.”
Alternative form of CBDC
Having said that, the governor’s anti-crypto stance is nothing new. In July, Indian Finance Minister Nirmala Sitharaman suggested that cryptocurrency should be banned and that the country’s central bank is pushing for a ban on cryptocurrencies while calling for global cooperation.
Alternatively, the central bank of India is offering an e-rupee, a central bank digital currency (CBDC) with the Unified Payments Interface (UPI), which is currently in the pilot phase, the central bank governor said.
According to Das, BQ Prime reports that the CBDC will have an “auto-sweep” and “auto-sweep” functions that will allow users to enter and exit CBDC wallets.
Public criticism in India
Meanwhile, crypto companies operating in India criticized the RBI’s effort to replace digital assets with a CBDC as “comparing apples to oranges”, stating that the published concept note points to the central bank’s limited, conservative and outdated view of crypto.
In November, Anto Paroian, CEO and Executive Director of crypto hedge fund ARK36, criticized the Indian government for viewing crypto as “more a threat than an opportunity”.
Disclaimer: The content on this site should not be considered as investment advice. Investment is speculative. When investing, your capital is at risk.
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