India has remained quite hostile towards crypto over the past few years. In 2018, for instance, the Reserve Bank of India [RBI] effectively banned crypto trade and ordered banks not to facilitate it. A Supreme Court ruling in 2020, nonetheless, reversed the same.
Earlier this year, the Asian country designed a new tax regime for cryptos. Initially, the 30% tax rate was announced. That was followed by another 1% tax deducted at source [TDS] pronouncement.
Speaking at the Business Standard BFSI Insight Summit, RBI Governor Shaktikanta Das re-chalked out his views on cryptos. When asked if India’s war against crypto is over, Das said,
“No, there is no war or anything like that. We firmly believed, and do firmly believe even now, that cryptocurrencies have absolutely no underlying.”
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Next Financial Crisis Will Come From Private Cryptos: Shaktikanta Das
He further added that cryptocurrencies have “certain huge inherent risks” for India’s “macroeconomic and financial stability.” He then briefly spoke about the developments over the last one year, including the latest episode built around FTX, and said,
“I think after all this I don’t think we need to say anything more about our stand. I think the time has proved that cryptocurrencies are worth what they are today.”
Owing to the prolonged bear market, crypto assets have lost a major chunk of their value. The global crypto market cap stood north of $3 billion last year. However, now it is down to merely $810.07 billion, per data from CoinMarketCap.
Talking about how price changes are a part and parcel of the game, Das said,
“Change in value of any so-called product is a function of the market. But unlike any other asset, or unlike any other product, our main concern about crypto is that it doesn’t have any underlying, whatsoever.”
The Indian central bank governor further said that he’s yet to hear any credible argument about what public good or what public purpose crypto serves. Das asserted that there’s still no clarity about the same and went on to opine,
“I think the term cryptocurrency, private cryptocurrency, is a fashionable way of describing what is otherwise a 100% speculative activity.”
Further elaborating on his stance, he said,
“Cryptocurrencies, private cryptocurrencies, owe their origin to bypass the system, to break the system. They don’t believe in the central bank currency. The do not believe in the regulated financial world, they want to bypass and beat the system.”
The central bank governor then went on to warn that the next financial crisis could come from private cryptocurrencies and added that he still held the view that this asset class should be prohibited. He said,
“I would still hold the view that it should be prohibited. I mean, countries have been taking different views, but our view is that it should be prohibited because if it is allowed to grow, please mark my words, the next financial crisis will come from private cryptocurrencies.”
What Are Other Countries Upto?
Leaving aside India, other countries have been hinting toward the tightening of crypto regulations. Australia recently revealed its plan to amplify crypto rules in 2023.
The incoming Chair of the UK’s FCA also asserted the need for even further crypto regulations to slash unwanted risks and curb money laundering. Towards the end of last week, even France jumped onto the bandwagon.
Nigeria, on the other hand, is considering legalizing crypto usage. As reported this week, the African country is contemplating passing a law for the legal use of Bitcoin and other crypto assets.
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