Ban crypto or prepare for next financial crisis, warns RBI governor

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The next financial crisis will come from private cryptocurrencies if they are not banned, Reserve Bank of India (RBI) Governor Shaktikanta Das said at a banking and finance event on Wednesday.

Fast facts

The central bank chief said that simply regulating the crypto industry and allowing it to grow will not be enough to avert financial disaster.

Note my words, the next financial crisis will come from private cryptocurrencies, they have no underlying value, and they carry enormous inherent risks to our macroeconomic and financial stability, he said.

In India, the term private cryptocurrencies is often used to distinguish cryptocurrencies that are not issued by the central bank, such as Bitcoin and Ether. The RBI launched a retail central bank digital currency (CBDC) pilot project in December.

I have yet to hear a credible argument about what public good or what public purpose [private cryptocurrencies] serve, Das said, adding that these tokens are only used for speculative purposes while defending the RBI’s plans to expand its CBDC project.

India assumed the G20 presidency in December, to be given the authority to set the agenda for global discussions on crypto regulation. India’s term will end on November 30, 2023.

Indian Finance Minister Nirmala Sitharaman said in November that crypto regulation should be an international priority and a topic of discussion during India’s G20 Presidency.

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