Cryptocurrencies threaten India’s financial stability, invest at own risk – RBI governor

Reserve Bank of India governor Shaktikanta Das today warned investors to exercise caution when investing in crypto-currencies.

“I have made our position very clear on this. Private crypto currency or whatever you call it, is a very big threat to our macro-economic and financial stability.

“RBI’s position is that private crypto-currencies will interfere with RBI’s ability to deal with deal with issue of financial or macro-economic stability,” he said.

“I also find it my duty to inform the investors that those who are investing in crypto-currencies should keep this in mind that whatever they are investing, they are investing at their own risk

I also want to point out that these crypto-currencies don’t have any underlying [asset or security], not even a tulip,” he added.

RBI also said the digital rupee central bank currency will be one-to-one convertible with regular, physical rupee.

At the same time, RBI officials pointed out that the central bank digital currency will exist in a wallet, rather than a bank account like regular rupee.

“The only difference is that it will exist in your wallet,” he added.

The comments come in the wake of hopes expressed by various crypto-evangelists that government’s decision to levy tax on profits from crypto-trading reflects a softening of its position on such assets.

Das’ comments indicate that there has been no such softening on the part of the establishment, and it continues to see crypto-currencies as a threat due to their ability to bypass regulatory control and monitoring mechanism on money movements.

RBI officials were interacting with media persons after taking a decision not to raise interest rates, as is being done by central banks in many countries such as the US and Europe.

Das said those central banks are motivated by their own compulsions, such as rising inflation in those economies, which do not apply to us, and therefore there is no immediate need to raise interest rates in India.