RBI governor expressed Cryptocurrencies are not currencies or financial assets

Reserve Bank of India governor Shaktikanta Das said the current financial stability report released on Thursday that cryptocurrencies are not currencies or financial assets.

RBI governor expressed Cryptocurrencies are not currencies or financial assets

Das said cryptocurrencies as a clear danger to the financial stability of India.

India continues to debate the right framework for crypto regulation, India's RBI has expressed why digital assets are a risk to the financial system for India.

Cryptocurrencies have gained popularity but stressed that digital assets couldn't be classified as currencies or digital assets that have no value.

The RBI governor warned that private cryptocurrencies could erode the country's money control mainly due to the dollarisation of assets.

Furthermore, RBI noted the risks connected with cryptocurrencies may keep soaring as the ecosystem evolves. as well RBI stated that capital account regulation gains by developing countries are threatened by cryptocurrencies resulting in financial stability.

RBI said:  

“Cryptocurrencies are not currencies as they do not have an issuer, they are not an instrument of debt or a financial asset and they do not have any intrinsic value. At the same time, cryptocurrencies pose risks,” 

RBI considers the crypto market's correlation with equities as another significant risk.

RBI stated: 

“Historically, private currencies have resulted in instability over time and in the current context, result in ‘dollarisation’, as they create a parallel currency system(s), which can undermine sovereign control over money supply, interest rates and macroeconomic stability.”

Accordingly, the RBI maintains that the growth of cryptocurrencies needs urgent regulation by countries policymakers intending to regulate cryptocurrencies should focus on challenges around cyber risk and climate-related financial risks.

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