According to the deputy governor of India’s central bank, cryptocurrency has no place in his country’s economy and is similar to a Ponzi scheme. He also stated that cryptocurrency was only one application of blockchain technology and that a ban on digital assets would have no effect on innovation.
According to India’s deputy governor, cryptocurrencies are similar to Ponzi schemes and have no intrinsic value. Rabi Sankar, speaking on Monday at the Indian Banks Association 17th Annual Banking Technology Conference, said cryptocurrencies had no place in India’s economy and posed significant risks to financial stability.
“All of these factors lead to the conclusion that prohibiting cryptocurrency is perhaps the most prudent option available to India,” Sankar said. “We examined the arguments advanced by those who advocate for the regulation of cryptocurrencies and discovered that none of them stand up to basic scrutiny.”
The deputy governor stated that the argument advanced by enthusiasts, including the use of crypto as a store of value or a medium of exchange and that they should be regulated as such did not stand up to “basic scrutiny.” He also stated that he does not believe crypto has advanced the development of blockchain technology.
“Even in the case of private authentication via consensus mechanisms, accounts can be maintained and rewards can be given in any legal tender currency,” Sankar explained. “In other words, developing native cryptocurrencies is just one method of implementing a blockchain; it can be viewed as just one application of blockchain technology.”
Those who argue that a ban on crypto would limit blockchain innovation, according to Sankar, are analogous to those who argue that a ban on nuclear weapons would harm advances in nuclear physics. While Sankar’s remarks are unsurprising, India’s policymakers have taken a dizzying stance on crypto regulation, resulting from a patchwork of ad-hoc laws that, at times, allowed private cryptos to function as digital assets while outlawing them at others.
The lack of a unified front on crypto has revealed fragmentation among the country’s policymakers on how to best police the nascent asset class. Earlier this month, India’s Finance Minister, Nirmala Sitharaman, proposed a 30% tax on crypto gains, raising hopes for crypto’s legitimacy as an asset class.
Last week, Sitharaman said she was not doing “anything to legalize or ban it [crypto]” at the moment, leaving the question of how crypto would be regulated in India unanswered. Instead, the minister stated that she wanted to wait until the consultation inputs were completed, and that taxing cryptocurrency is now the government’s “sovereign right.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.