Reserve Bank of India Governor Shaktikanta Das said this week that allowing private cryptocurrencies to grow will lead to the next financial crisis. He also reiterated calls for a complete ban on central banks, claiming that such instruments have no underlying value and are speculative.
“After the past one year of growth, including the latest episode around FTX, I don’t think we need to say much more. Time has proven that crypto today is the best platform to invest in,” said Das, speaking at the ‘BFSI Insight Summit’. is worth.
“Changes in the value of any so-called product are a function of the market. But our main concern with crypto, unlike any other asset or product, is that it has no underlying fundamentals. I think crypto or private cryptocurrency is hard to describe. A fashionable way of doing what is otherwise 100% speculative activity. I would still hold the view that it should be banned. If you try to regulate it and allow it to grow, please mark my words, next The financial crisis will come from private cryptocurrencies,” he said.
At the event, which was attended by banking executives and lawmakers, the RBI governor reiterated that cryptocurrencies carry significant inherent risks in terms of macroeconomic and financial stability. Earlier this year, Union Finance Minister Nirmala Sitharaman had also said that the biggest risk of cryptocurrencies could be money laundering and its use for terrorism financing amid the fintech revolution being pioneered.
“I think regulation using technology is the only answer. Regulation using technology has to be nimble enough not to be behind the curve, but make sure it’s on top of it. And that’s not possible. .. If any one country thinks it can handle it. It should be across the board,” she told a symposium during the International Monetary Fund’s spring meeting.
More issues in 2023!
Das had previously described cryptocurrencies as an “obvious threat” and reports also suggested that with the popularity of cryptos, related issues are also on the rise. For example, the Security Endpoint Threat Report 2019 by Microsoft states that crypto mining malware attacks affect web users in India at a rate of Rs. 4.6 times higher than the regional and worldwide average. According to the report, India has the second highest number of bitcoin mining attacks in the Asia Pacific region, behind only Sri Lanka.
Sunil Sharma, managing director (sales) for India and SAARC at Sophos, said that crypto-related scams will increase in 2023. And the most popular type of crypto crime — crypto mining. There has also been a rise in crypto-related mobile apps in the form of fake wallets that are used to scam investors. Additionally, crypto-related scams are constantly shifting and mutating, swinging from fake cryptocurrency investments to fake crypto derivatives investments and other fake financial markets,” he added.
In view of the dangers Dr Pawan DuggalA Supreme Court lawyer and a well-known cyber expert told News18 Before that India needs to come up with an effective legal framework to deal with such emerging cyber crimes.
industry vision
Following the recent statement on crypto and the possible financial crisis by Das, one of the industry insiders Vikram Subburaj, CEO of crypto platform Giotas told News18 The continued reluctance of the RBI to assess crypto as a proper investment vehicle of the future is disappointing.
“Crypto has evolved since its inception and has been widely adopted in some growing economies and large, regulated countries such as the US. A natural evolution of a product to support ETFs etc could be to better protect investors. Next A few years will see true innovation in all aspects and we would like India to be a part of this change.”
In terms of scams and regulations, Subburaj said scams have occurred in every industry including banking and stricter regulations can only help weed out bad actors and prevent scams like FTX from happening.
He added: “RBI should consider the fact that the Indian crypto ecosystem has been highly compliant so far, despite the lack of clarity on certain aspects.”
Another expert, KoinX founder Puneet Agarwal said that 2022 has been an interesting year for the crypto industry and the global economic sector in general. “With such promising progress, we also seem to be running into roadblocks, especially with the latest statement from the RBI governor, given the ban on crypto as a whole, due to the ‘perceived risk’ it poses to the broader economy. It is made up. While the industry is not new to such opposition, one notable observation right now is the crypto industry’s lack of strength, which is simply a result of the weak global economy at the moment,” he added.
Agarwal believes that Web 3.0 brings with it a lot of new opportunities and technological advancements. “Web 3.0 introduces many opportunities and technological advancements. We have seen 450+ Indian Web 3 startups, 4+ unicorns, 70+ institutional investors and a total investment of over 1.3 billion by Indian startups in the industry,” he said.
“Even though the market isn’t the best right now, it doesn’t mean we won’t see it in the future, especially considering how much mainstream attention we’ve gotten this year! For starters, maybe it’s the industry as a whole. Might start with regulating,” the industry insider said.
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