India currently holds the presidency of the G-20, giving the nation powers to determine the agenda around discussions regarding global crypto rule-making.
India’s central bank Governor Shaktikanta Das has predicted that the next financial crisis will come from “private cryptocurrencies” if they are allowed to be regulated and not banned outright. Das was speaking at the Business Standard BFSI Insight Summit on Wednesday.
“Our view is that it should be prohibited because if you try to regulate it and allow it to grow, please mark my words the next financial crisis will come from private cryptocurrencies,” Das said. “They have no underlying value. They have huge inherent risks for our macro economic and financial stability. I am yet to hear any credible argument about what public good or what public purpose it serves.”
The term “private cryptocurrencies” is being used to make the distinction between a public cryptocurrency like India’s CBDC and cryptocurrencies such as bitcoin and ether, which are issued by private players, people familiar with the central bank’s functioning told CoinDesk.
“I think the term private cryptocurrency is a fashionable way of describing what is otherwise a 100% speculative activity and there is a talk that it should be regulated,” Das said.
The Reserve Bank of India’s (RBI) governor has previously stated that cryptocurrencies should be prohibited. These comments assume significance at a time when the nation is holding the presidency of the Group of 20 (G-20) nations, giving it the power to set the agenda. Indian Finance Minister Nirmala Sitharaman has said how to regulate crypto assets should be an international priority and will be a big topic of discussion during its G-20 presidency.
The RBI’s entourage of more than 20 people, according to sources, has been attending these G-20 meetings in India over the past few days where different nations are presenting their views on how to regulate the space.
“Countries have been taking different views,” said Das. “I don’t think we need to say anything more about our stand after the developments over the last one year including the latest episode around FTX.”
The governor’s comments also come at a time when the RBI is trying to create awareness around its CBDC, the e-rupee or digital rupee, and is facing questions around whether CBDCs are in competition with private cryptocurrencies.
“It’s not a question of fear of missing out or of offering competition to a private cryptocurrency. I think that is how the world is going to evolve, said Das when asked whether India’s CBDC was an “optic to fight crypto.” “You will see in days to come more and more central banks will embrace digital currencies and India has been in the forefront of the digital revolution in the current century.”
Previously, Das said the warning bells sounded by the Indian central bank persuaded people to avoid cryptocurrencies.