Reserve Bank of India Says That Crypto Doesn’t Have an Intrinsic Value

Vignesh Karunanidhi
Reserve Bank of India Says That Crypto Doesn’t Have an Intrinsic Value
Source: Forkast News

As India is still in a confused stance on what regulations to frame for crypto, the Reserve Bank of India says that crypto has no intrinsic value. The country has been in talks with the central bank and the finance minister for years to set up the best and right framework for the regulation of digital assets.

The Reserve Bank of India is stressing the risks of cryptocurrencies from time to time. The central bank released a Financial Stability report on June 30 where it talks about crypto. RBI stated that even though cryptocurrencies amassed quite the popularity over the years they can neither be considered as a financial nor a currency. The bank also stated that they carry no intrinsic value.

Source: Bitcoinist

RBI warns that crypto could lead to the dollarization of most assets

RBI stated in the report that crypto tumbles the value of the native currency and the government may lose control of the money situation, eventually leading to the dollarization of assets.

The one evidently clear thing is that the risks revolving around crypto will increase with its growth. The more it evolves, the greater the risk. This is true as the global adoption of crypto is eyed as an opportunity by scammers and hackers.

The RBI warned that cryptocurrencies endanger developing nations’ capital account control gains, resulting in financial instability.

“Cryptocurrencies are not currencies as they do not have an issuer, they are not an instrument of debt or a financial asset and they do not have any intrinsic value. At the same time, cryptocurrencies pose risks.”

Reserve Bank of India

The report examined closely three different sectors of cryptocurrency, namely: Bitcoin, stablecoins, DeFi, and trading platforms. Some of the risks associated with crypto and regulated financial systems were identified. These include credit and operational risks, mismatch of credit, concentration risk of crypto trading platforms, and lack of a regulatory overview.

The report also highlighted bitcoin’s and DeFi’s lack of backing. The Reserve Bank of India is also standing along with its opinion that countries need to frame urgent regulations for cryptocurrencies following their growth.