Tech

India’s central bank chief warns cryptocurrencies will cause the next financial crisis if allowed to flourish


The governor of India’s central bank said on Wednesday that it is not at war with cryptocurrencies, but asserted that cryptocurrencies have no fundamental fundamentals and that their use should be banned.

RBI Governor Shaktikanta Das told a room filled with banking executives and lawmakers that cryptocurrencies pose a huge inherent risk to the nation’s macroeconomic and stability. “After the development of the past year, including the latest episode surrounding FTX, I don’t think we need to say anything more. Time has proven that cryptocurrencies are worth what they are today.”

“Changing value in any so-called product is a function of the market. But unlike any other asset or product, our main concern with cryptocurrency is that it doesn’t have any basis. I think crypto or private crypto is a fashionable way to describe 100% speculative activity,” Das said.

Das said cryptocurrency has its roots in the idea that it bypasses or disrupts the existing financial system. “They don’t believe in central banks, they don’t believe in a regulated financial world. I have yet to hear a valid argument about the public purpose it serves,” he said, adding that he holds the view that cryptocurrencies should be banned.

“It should be banned because if it is allowed to grow… let’s say it is regulated and allowed to grow… please note that the next financial crisis will come from private cryptocurrencies,” he said. .

India is one of the countries that has taken a strict approach in dealing with cryptocurrencies. Earlier this year, it started taxing cryptocurrencies, 30% tax on profits and deduct 1% for every crypto transaction.

The country’s move, coupled with the market downturn, severely depleted local exchanges CoinSwitch Kuber, backed by Sequoia India and Andreessen Horowitz, and CoinDCX, backed by Pantera , is treated in water.

Changpeng “CZ” Zhao, founder and CEO of the world’s largest cryptocurrency exchange Binance, told TechCrunch in a recent interview that the company does not consider India a “very crypto-friendly environment”. He said the company was trying to convey its concerns to local governments about local taxation, but insisted that tax policies often take a long time to change.

“Binance is aimed at countries with pro-crypto and corporate regulation. We don’t go to countries where we won’t have a sustainable business — or any business, whether we go or not,” he said.

Coinbase, which already supports both CoinDCX and CoinSwitch Kuber, launched its cryptocurrency platform in the country earlier this year but quickly restore service amid regulatory fear. Coinbase co-founder and CEO Brian Armstrong said in May that the company was disabling Coinbase’s support for UPI-based local payments “because of a number of issues.” informal pressure from [central bank] Reserve Bank of India.”

“Crypto closes 2021 with a financial narrative that as we know it is slow, inefficient and clumsy. Defi and DAO are the way forward. Cryptocurrency prices, in their own terms, are rising and investors are HODLing. Since May 2022, the cryptocurrency has lost part of its aura — 2/3 of its value. The failure of some entities has caused the ecosystem to disintegrate,” said T. Rabi Sankar, Deputy Governor of RBI, who served crypto wallet with tulips and Ponzi schemesaid Wednesday.

“Technology heralded as the end of governments, regulators and intermediaries – the underlying philosophy of cryptocurrencies – are now frantically looking for ways to be regulated,” he said.

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