RBI considers cryptocurrencies a major threat

The crypto market has been in a downtrend since the last few months and it has caused huge losses to the investors. Terming cryptocurrencies as a ‘clear threat’, the Reserve Bank of India (RBI) said that if the value of something is built on mere trust without the basis of an asset, it is mere speculation in a good name. The central government is preparing a consultation paper on cryptocurrencies. Inputs have been taken from various stakeholders and institutions for this.

RBI has already expressed apprehensions regarding cryptocurrencies. RBI Governor Shaktikanta Das has said in the Financial Stability Report (FSR) that cyber risks are also increasing with the financial system becoming more digitized and this needs to be addressed. “Cryptocurrencies are a clear threat. The value of anything, without the basis of an asset, is merely speculation,” he said. The fall in cryptocurrencies has weakened the financial position of many firms in this segment and forced them to take measures such as layoffs to reduce their costs.

RBI had issued a circular about cryptocurrencies about four years ago prohibiting entities under its regulation from dealing in such instruments. However, about two years ago, the Supreme Court had quashed this circular of RBI. The regulatory position regarding cryptocurrencies in the country is unclear. Inputs are also being taken from the World Bank and the International Monetary Fund (IMF) for the consultation paper on cryptocurrencies being prepared by the government. In the FSR, Das has also said that technology has increased the reach of the financial sector and should be fully exploited, but at the same time the risk of weakening financial stability needs to be taken care of.

Regarding the economy, Das said that global developments and geo-political tensions are affecting it. The financial system of the country is strong to face these shocks. Das said, “Our endeavor is to meet all challenges, external and internal, with strength and innovative solutions.” An important feature of this situation is that with the strengthening of the country’s financial system, the economy will remain good and opportunities will increase for this. It is showing good governance and better risk management.

(This news has not been edited by NDTV team. It has been published directly from Syndicate feed.)

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