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 that cryptocurrency were not suitable for definition as a currency or asset.
“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 accepting its use as a store-of-value and currency in certain cases. It could be encouraged to use the framework set out by the government, rather than merely 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, even though it has been 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 attacked the true worth of cryptocurrency by saying:
“Also unlike the Rupee’s value, which is anchored in monetary policy and its status of legal tender, crypto assets are valued solely on the assumption that other people will value them and use them.”
India is just one country where lawmakers and crypto companies have called for more regulatory clarity. Businesses cannot formulate long-term plans that are compliant with all laws without such clarity.
Similar: MIT and Boston Fed give digital-dollar CBDC a small test run
Nirmala Sitharaman, the finance minister, stated that she would not decide immediately whether to legalize crypto or ban it. This was despite India being in a long state of regulatory limbo.
India’s government has been testing its abilities to deploy a digital currency central bank (CBDC) for a while. Sitharaman stated on February 1 that she expects to launch a digital rupee programme by 2023 in order to increase economic growth.