RBI Deputy Governor T Rabi Sankar has said that banning cryptocurrencies is the most advisable choice for India as they are akin to Ponzi schemes and “may even be worse”.
Rabi Shankar’s view:
“More substantially, they can (and if allowed most likely will) wreck the currency system, the monetary authority, the banking system, and in general Government’s ability to control the economy,” 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,” he said at an IBA meet. “They are akin to Ponzi schemes, and may even be worse,” Sankar said. “From what we have seen so far, there does not appear to be any case to allow cryptocurrencies to be legitimized in India.”
Rabi Sankar added that while Ponzi schemes invested in income-earning assets, cryptos are just “gambling instruments”.
Shaktikanta Das had cautioned investors while investing in cryptocurrencies. “I think I must tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip,” Das said.
The RBI deputy governor further shed light on the “socially wasteful energy use” of crypto infrastructure.” About 900 new Bitcoin a day require electricity worth $ 45mn a day. By some estimates, electricity uses of bitcoins equalled that of the entire country of Switzerland in 2019,” he claimed.
” We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated and found that none of them stands up to basic scrutiny,” he added.