Deputy Governor of the Reserve Bank of India advocates for a crypto ban

on Feb 15, 2022
  • The deputy governor of the Reserve Bank of India has advocated for a ban on cryptocurrencies.
  • The top official said that cryptocurrencies are similar to a Ponzi scheme.
  • Recently, India imposed a 30% tax on cryptocurrencies during the Union Budget 2022.

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The deputy governor of the Reserve Bank of India, T. Rabi Sankar, has stated that cryptocurrencies are similar to Ponzi schemes. He has advocated for a ban on cryptocurrencies, saying it is a better option than regulating these assets.

The remarks come when India is imposing a 30% tax on cryptocurrency transactions. The tax will be part of the Union Budget 2022.

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RBI deputy governor calls for a crypto ban

Sankar was speaking during a keynote address on February 14, where he said that cryptocurrencies were not a currency, an asset or a commodity. According to the official, cryptocurrencies “cannot be regulated by any financial sector regulator. It is not possible to regulate something that one cannot define.”

Sankar said that regulating digital currencies would be like advocating for their usage as a store of value of a form of currency. However, he recognized that a ban would still have a minimal effect on entirely getting rid of the sector, as some people would continue using these assets.

The official pointed to the monetary and fiscal risks posed by cryptocurrencies. By regulating these assets, more people would adopt them, which will draw people away from using the Rupee.

Sankar added,

Also, unlike the value of the Rupee, which is anchored by monetary policy and its status as legal tender, the value of crypto assets rests solely on the expectation that others will also value and use them.

Crypto regulations in India

The crypto regulatory framework in India is currently in an uncertain state. Crypto firms and legislators have been demanding a clear regulatory framework, but this has failed to come. This clarity would ensure businesses dealing in cryptocurrencies remain compliant.

Last week, the Minister of Finance in India, Nirmala Sitharaman, said she would wait upon discussions with the relevant bodies before banning or regulating cryptocurrencies. As a potential ban or regulation looms, the Indian government has tested a digital rupee. Earlier this month, Sitharaman said that a digital rupee could be launched by 2023, which will boost India’s economic growth.