RBI Governor Shaktikanta Das warned that the crypto market could crash and small investors would lose money. He added that the central bank believes its warning is deterring many people from investing in cryptocurrencies.
RBI Governor’s Crypto Warning
Shaktikanta Das, governor of India’s central bank, the Reserve Bank of India (RBI), warned about investing in cryptocurrencies in an interview with ET Now earlier this week.
Noting that the RBI has warned investors several times about the risks of investing in crypto, Das said, ” I am glad that we sounded those warning signals and would like to believe that a large number of people would have taken note of the warning signals and the concerns expressed by the Reserve Bank.” He added,
I would like to believe … . that many people did not invest in crypto or withdrew from crypto thanks to the caution and concerns emanating from the Reserve Banks.
“Crypto, you know, we have said it before, it can create a lot of financial instability in terms of the central bank’s ability to determine monetary policy,” the RBI governor continued.” It will also adversely affect our exchange rate, capital flows and the stability of the banking sector.”
Das further cautioned that cryptocurrencies “could be used as a tool for money laundering and illicit money transfers.” He also reiterated his earlier statement.” In fact, I said at one point that it has no foundation, not even a tulip.”
India’s central bank governor opined.
Anything that doesn’t have an underlying asset can and has crashed because the price doesn’t stay high all the time, and ultimately … it’s the small investor who loses money, so it’s a big risk for the small investor.
Das said in July that cryptocurrencies are clearly dangerous; in May, he warned about crypto amid a market sell-off. After the collapse of cryptocurrencies Terra (LUNA) and Stable Coin Terraus (UST), “we have warned against crypto, now look what has happened to the crypto market,” the governor said.
The RBI recommended that the Indian government ban cryptocurrencies, including Bitcoin and Ether. However, Indian Finance Minister Nirmala Sitharaman said that both bans and regulations can only be effective with “significant” international cooperation.
India does not yet have a specific regulatory framework for cryptocurrencies. The Indian government has been working on a crypto bill for several years, but it has yet to be taken up by parliament. Recently, the Finance Minister asked crypto investors to pay attention as authorities are investigating a number of crypto exchanges in a money laundering probe.
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