RBI Governor says ‘Cryptocurrency has no underlying value’
- The Governor had earlier said that cryptocurrencies compare to ‘not even a tulip’, referencing to Tulip Rush in Netherlands.
- RBI’s earlier ban on cryptocurrencies in 2018 was overturned by the Supreme Court
Reserve bank of India governor Shaktikanta Das on Monday, May 23, said that Crytpcurrency has no underlying value, and the central bank had for long been cautioning against cryptocurrency in a CNBC-TV 18 Interview. The Governor said people would have raised questions after the recent unprecedented cryptocurrency market crash had the RBI been regulating the digital assets by now.
RBI Governor talking about the value cryptocurrency possesses currently, said,
“This is something whose underlying (value) is nothing. There are big questions on how do you regulate it. Our position remains very clear, and it will seriously undermine the monetary, financial, and macroeconomic stability of India”.Shaktikanta Das, RBI Governor
Crypto sector has been witnessing one crash after another in the past few weeks. Bitcoin shredded its value to trade at $27,000 earlier this month and has not traded above the $30,000 mark in days.
Das also stated that he believes the Indian Government seems to be in sync with RBI’s position on cryptocurrencies that they have no underlying value. The RBI has for quite some time said that cryptocurrencies have no underlying value, with Das saying that they compare to ‘not even a tulip.’
He was referring to the ‘tulip mania‘ phenomenon of the 17th Century that is often used as a classic example of a financial bubble, where the price of something goes up, not owing to their intrinsic value but solely because of speculators wanting to make a profit by selling a bulb of the exotic flower.
“We have conveyed our position to the Government, and they will take a considered call. I think the utterances and statements coming out from the Government are more or less in sync. They are also equally concerned,” .Shaktikanta Das, RBI Governor
In its initial days, when Bitcoin was slowly gained traction in India, the RBI had planned to ban cryptocurrencies. However, a Supreme Court order in 2018 had overturned its ban on them. Since then, the RBI has maintained a tight stand on digital assets. The Central Bank has repeatedly flagged the impact of cryptocurrencies on the macroeconomy in India.
On similar lines the Coinbase CEO, Brian Armstrong recently made headlines when he said that Coinbase had to disable the Unified Payments Interface (UPI) on its platform due to ‘informal pressure from the RBI’ after launching in India.
The Indian Government has always had a skeptical and rather intolerant stance towards cryptocurrency. In the Union Budget presented this year, India’s Finance Minister Nirmala Sitharaman proposed a 30% tax on trading in cryptocurrencies and related assets, with 1% deducted at source (TDS) when such transactions occur.