T. Rabi Sankar, Indian Reserve Bank of India, compared cryptocurrency with ponzi schemes, and stated that it would be best for India to ban them rather than regulate them.
Sankar, the RBI’s deputy governor, stated to audiences at a keynote address in February that “We have also found that cryptocurrencies are not suitable for definition as a currency or asset or commodity.”
“Cryptocurrencies do not represent currencies, financial assets, real assets, digital assets, or currencies. It cannot be regulated or supervised by any financial regulator. It is impossible to regulate something you cannot define.”
Sankar believes that regulation of crypto would eventually be condoning its usage as a store-of-value and currency in certain cases. It could be encouraged to use the government’s framework by simply regulating it. He acknowledges, however, that crypto will be used by some people even if it’s banned. This is just like drug trafficking, which is still a widespread phenomenon, despite being banned.
He also noted that allowing cryptocurrency to exist in a fiat-dominated environment “is bound to have unintended consequences for the monetary stability of a country.” Sankar stated that crypto’s utility as an investment asset will increase and that it could be used to draw people away from the Rupee.
Sankar made a mockery of the true value and potential dangers of cryptocurrency by saying:
“The value of crypto assets is also independent of the value of Rupee. Its value is determined solely by the expectation that other people will value them and use them.”
India is just one country where lawmakers and crypto companies have demanded more regulatory clarity. Businesses cannot formulate long-term plans that are compliant with all laws without such clarity.
Nirmala Sitharaman, finance minister, stated that she would not instantly decide if crypto should be legalized or banned. This was in response to the prolonged state of regulatory uncertainty that India is currently experiencing.
The Indian government has been testing its abilities to deploy a central bank digital currency ( CBDC). Sitharaman stated on February 1 that she expects to start a digital rupee programme by 2023 in order to increase economic growth.
