Banning crypto is 'most advisable choice' says Indian central bank deputy governor
The deputy governor of the Reserve Bank of India, T. Rabi Sankar compared cryptocurrency to Ponzi schemes and said that banning them, not regulating them, would be the “most advisable choice” for the Indian government.
The deputy governor told audiences at a keynote address on Feb. 14 that “We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity.”
"Cryptocurrencies are not currencies, or financial assets or real assets or even digital assets. Therefore, it cannot be regulated by any financial sector regulator. It is not possible to regulate something that one cannot define," Sankar said.
The deputy governor feels that regulating cryptocurrency would ultimately be condoning its use as a store of value and even a currency in some cases. Merely regulating it could be akin to encouraging its use within the framework laid out by the government. However, he acknowledges that some people will still use crypto if it is banned, just as “drug trafficking is a rampant phenomenon despite a ban.”
Sankar also pointed out that permitting cryptocurrency to exist in a fiat-dominated ecosystem is bound to have a destabilizing effect on the monetary and fiscal stability of a country.
If crypto is regulated so that it can be used as an investment asset, Sankar said that its utility will rise as a store of value, and could draw more users away from the Rupee.
India is in the list of countries where crypto companies and lawmakers have demanded greater regulatory clarity to guide their actions. The Indian government is also experimenting with its capabilities in deploying a central bank digital currency (CBDC). Sitharaman revealed on Feb. 1 that she expected to launch a digital rupee program by 2023 to boost economic growth.