Crypto ban: RBI governor has a warning – Times of India

The Reserve Bank of India (RBI) governor Shaktikanta Das has warned against unregulated Crypto. Das said that the next financial crisis will come from crypto collapse if private digital coins are allowed to grow unchecked. The RBI governor was speaking at the BFSI Insight Summit 2022. Das reiterated his view of banning crypto currency. He said that he still holds the view that cryptocurrencies should be banned as they have no underlying value and pose risks for macroeconomic and global financial stability.
“Crypto or private cryptocurrency is a fashionable way of describing what is otherwise a 100 per cent speculative activity,” he added. This is not the first time that Das has spoken against cryptocurrency. The RBI has long held its view that private cryptocurrencies are a threat to stability and has been against legitimising its use. The government’s bill that seeks to prohibit all private cryptocurrencies in India is yet to be tabled in Parliament. It is not clear if the government will go ahead with this.
Worst year for Crypto
The year 2022 has been one of the worst years for Crypto. Bitcoin has lost 60% of its value and the wider crypto market has shrunk by $1.4 trillion this year. This is largely due to rising interest rates, vanishing risk appetite and corporate collapses including that of Sam Bankman-Fried’s FTX. Crypto funds have seen net inflows of $498 million in 2022, versus $9.1 billion in 2021, according to data from digital asset manager CoinShares.

Digital Rupee is here
To combat rising popularity of crypto, the central bank recently launched pilots of its own digital currency, the digital rupee or central bank digital currency (CBDC). The pilot for the retail version of the digital rupee began on December 1, covering select locations in a closed user group comprising participating customers and merchants. Digital Rupee has been rolled out in Mumbai, New Delhi, Bengaluru and Bhubaneswar in the first phase. It will soon be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The CBDCs can boost innovation in cross-border payments, making these transactions instantaneous and help overcome key challenges relating to time zone, exchange rate differences as well as legal and regulatory requirements across jurisdictions.
The pilot for the wholesale version kicked off a month before that, on November 1, in partnership with nine banks. In this pilot, the digital rupee is being used to settle secondary market transactions in government securities.