Cryptocurrencies are similar to Ponzi schemes or worse, according to a deputy governor of the Reserve Bank of India (RBI), and banning them is the most rational choice for India to avert the threat they represent to financial and macroeconomic stability.
T Rabi Sankar’s remarks came just days after RBI Governor Shaktikanta Das slammed digital currencies. The government’s recent budget announcement to tax gains from cryptocurrencies has raised hopes that they will not be banned.
Reportedly, Crypto exchanges and investors have been arguing for the regulation of cryptocurrencies as an asset, and the government’s recent budget announcement to tax gains from these has raised hopes that they will not be banned. Sankar, on the other hand, criticized the idea of regulating this extremely volatile virtual money and instead advocated for an outright prohibition.
Sankar believes that cryptocurrencies were created to circumvent the regulated financial system and that he does not accept the notion that cryptocurrencies must be allowed to grow for blockchain technology to flourish.
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Last year, illegal cryptocurrency transactions totaled $14 billion (about Rs 1 lakh crore), according to Shankar, who cited a Wall Street Journal study based on research by blockchain analytics platform Chainalysis Inc. As per the industry estimates, there are between 1.5 and 2 crore cryptocurrency investors in India, with total holdings of over Rs 40,000 crore ($5.3 billion).
According to the RBI, the average holding remains tiny, at Rs 1,566, implying that “wealth loss, if it occurs, is expected to affect only a small percentage of these investors.”