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Crypto Could Trigger Next Financial Crisis, Says India’s RBI Chief

Crypto Could Trigger Next Financial Crisis, Says India’s RBI Chief

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Reserve Bank of India (RBI) Governor Shaktikanta Das did not mince his words when discussing the crypto sector at a recent conference, claiming that “private” crypto will be behind the next financial crisis.

In a speech at the Business Standard BFSI Insight Summit on Dec. 21, Das suggested that private cryptos — those not issued by banks or governments — are unbacked and are purely speculative vehicles.

“They have no underlying value. They pose enormous inherent risks to our macroeconomic and financial stability. I have yet to hear any credible argument as to what public good or purpose they serve,” he said.

Shakktanta Das Speaks on the Summit, Photo: Kamlesh Pednekar

Adding to these sentiments, this suggested that a comprehensive crypto ban in India would be the best approach going forward:

“It [private cryptocurrency trade] is a 100% speculative activity and I would still think it should be banned…because if it’s allowed to grow, if you try to regulate it and let it grow, please mark my words, the next financial crisis will be come from private cryptocurrencies.”

The RBI chief highlighted examples of such risks, pointing to the recent FTX implosion led by newly delivered Sam Bankman Fried.

“I don’t think we need to say anything more about our booth after last year’s developments, including the latest episode surrounding FTX,” he said.

Such comments mark yet another instance where a key figure in politics or finance has blamed the crypto sector for the collapse of FTX, with many U.S. senators in particular seizing the opportunity to smack digital assets in recent weeks.

That, of course, spoke much more positively about Central Bank Digital Currencies (CBDCs) as he emphasized that the RBI is actively pushing to get its digital rupee off the ground.

“You will see in the coming days that more and more central banks will embrace digital currencies and India has been at the forefront of the digital revolution in the current century,” he said.

The RBI has had a frosty view of crypto in the past, questioning its value on multiple occasions. Recent comments from Das show sentiment is only deteriorating as the bank only placed the sector at the bottom of its list of systemic risks in June.

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