Cryptocurrencies threaten financial sovereignty, need to be banned: RBI Dy Guv : The Tribune India

Join Whatsapp Channel

Cryptocurrencies threaten financial sovereignty, need to be banned: RBI Dy Guv

The Deputy Governor said crypto-technology is underpinned by a philosophy to evade government controls.

Cryptocurrencies threaten financial sovereignty, need to be banned: RBI Dy Guv

Photo for representational purpose only. iStock



PTI

Mumbai, February 14

Making a strong case for banning cryptocurrencies, Reserve Bank Deputy Governor T Rabi Sankar on Monday said they are even worse than Ponzi schemes and threaten the financial sovereignty of a country.

Observing that crypto-technology is underpinned by a philosophy to evade government controls, he said they have been specifically developed to bypass the regulated financial system.

More substantially, he added, cryptocurrencies can wreck the currency system, monetary authority, banking system, and in general the government's ability to control the economy.

"All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India," Sankar said while delivering a keynote address at the Indian Banks Association 17th Annual Banking Technology Conference and Awards.

The Deputy Governor said crypto-technology is underpinned by a philosophy to evade government controls.

"Cryptocurrencies have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution.

"We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi schemes, and may even be worse. These should be reason enough to keep them away from the formal financial system," he noted.

Additionally, they undermine financial integrity, especially the KYC regime and AML/CFT (anti-money laundering/combating the financing of terrorism) regulations and at least potentially facilitate anti-social activities, Sankar said.

"They threaten the financial sovereignty of a country and make it susceptible to strategic manipulation by private corporates creating these currencies or governments that control them...We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated and found that none of them stand up to basic scrutiny," he said.

The senior RBI official further said global advertisements with themes such as 'fortune favours the brave' is reflected somewhat in our very own 'lag ja re...kuch to badlega'.

"It would serve us well if the understanding about cryptocurrencies goes beyond the hype and gets rooted in reason and pragmatism," he added.

Sankar also dismissed as superficial the argument that cryptocurrencies should not be banned because a ban is unlikely to be effective.

One might as well argue that drug trafficking is a rampant phenomenon despite a ban, and therefore drug trafficking should be legalised and regulated, he remarked.

If cryptocurrencies are banned, the vast majority of investors who are law abiding would desist from investing. Those few elements who would continue to invest will essentially be carrying out an illegal activity. Such exceptions should reinforce the need for a ban, rather than invalidate it, he said.

#cryptocurrency #rbi


Top News

EC seeks BJP's response on Opposition charge of PM Modi violating model code

Election Commission sends notices to PM Modi, Rahul, Kharge over violation of Model Code of Conduct

ECI invokes Section 77 of Representation of People Act, hold...

Massive landslide hit Arunachal-China border area; major portion of highway washed away

Massive landslide hits Arunachal-China border area; major portion of highway washed away

Videos shows huge stretch of the highway missing, making it ...

Saurabh Bharadwaj alleges conspiracy to halt Delhi mayoral polls, oust AAP from MCD

Saurabh Bharadwaj alleges conspiracy to halt Delhi mayoral polls, oust AAP from MCD

The minister also accuses Chief Secretary Naresh Kumar of fl...

JEE-Main 2024 result declared; 56 candidates score 100 percentile

JEE-Main 2024 result declared; 56 candidates score 100 percentile

Out of 56, 15 are from Telangana, 7 each from Andhra Pradesh...

INDIA bloc seeking votes to provide religion-based reservation: PM Modi

INDIA bloc seeking votes to provide religion-based reservation: PM Modi

Claims the Congress not only wants to conduct an economic su...


Cities

View All