In a press conference on Thursday, Reserve Bank of India Governor Shaktikanta Das delivered a stern warning against investing in cryptocurrencies. He stated that investors must remember that cryptocurrencies have no underlying value, and not even a ‘tulip,’ referring to a speculative bubble.
India’s Central Bank governor gave a scathing assessment of the digital currency craze just a few days after the Indian government established a taxation framework for crypto coins. A week ago, India’s government read the proposed budget for the year 2022-23 in which the authorities imposed a 30% tax on gains made from cryptocurrency trades. However, crypto advocates, who in the past feared the government might completely ban cryptocurrencies, considered the imposition of the taxation as a sign of official acceptance.
In the news conference, Das cautioned investors against risks associated with cryptocurrencies. He said: "Private cryptocurrency is a huge threat to macro-economic stability and financial stability...investors should keep this in mind that they are investing at their own risk. these cryptocurrencies have no underlying (value) - not even a tulip."
The Central Bank governor stated that it is his "duty" to caution investors, and told them to keep in mind that they are investing in crypto coins at their own risk.
Preparation to Launch Digital Rupee
India’s Central Bank has repeatedly warned about crypto risks. In November last year, India’s Prime Minister Narendra Modi mentioned that cryptocurrencies could “spoil our youth." The government has repeatedly warned that unregulated cryptocurrency markets could become avenues for terror financing, fraud, and money laundering .
Late last year, The Directorate of Enforcement, India's agency tasked with fighting financial crime, said that it was investigating at least eight cases of cryptocurrency-related frauds. The RBI also warned that private cryptocurrencies could undermine its ability to maintain financial stability. As a result, the Central Bank is preparing to launch its own digital currency next year. Recently, Nirmala Sitharaman, the country’s finance minister, said that India’s Central Bank will launch a digital version of the rupee in the next financial year. He stated that the introduction of a central bank digital currency (CBDC) would give a boost to the digital economy and lead to a more efficient and cheaper currency management system.
However, despite warnings from the government and plans to launch a digital rupee, many locals are still engaging in crypto trading. There are estimated to be between 15 million to 20 million active crypto investors in India.
