Lagatar24 Desk
New Delhi, Feb 10: Shaktikanta Das, India’s central bank governor and a long-time critic of cryptocurrencies, has launched another attack on digital tokens, claiming they have no underlying value and pose a risk to financial stability.
Referring to the Dutch tulip bulb market bubble in the 17th century he said, “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, not even a tulip.”
Governor Das’ remarks came only days after the Indian government clarified the legal position of cryptocurrency trading. Finance Minister Nirmala Sitharaman proposed hefty taxes on such transactions in her federal budget speech on February 1, basically categorising them as earnings from legal but not encouraged activities like gambling. Regulations are in the works.
RBI, on the other hand, has taken a firm stance against private digital currencies. The central bank is concerned about capital controls because cryptocurrencies are designed to be traded freely and anonymously, especially since it controls the partially convertible Indian rupee. Concerns have been raised about money laundering and terrorism financing.
“Private crypto currency or whatever name you call is a big threat to our macroeconomic stability and financial stability,” Das said.
RBI is building its own digital rupee to mitigate the impact of cryptocurrencies, however Das declined to give a specific timeline for when it will be ready. Sitharaman stated in the budget that a central bank digital currency will be available by April 1 of the following fiscal year.
“We are making progress on CBDCs after carefully, cautiously examining it because there are risks,” he said. “The biggest risk is of cybersecurity and possibility of counterfeiting. We should absolutely prevent that.”
