India’s central bank, the Reserve Bank of India was in the news because of its stance on cryptocurrency. Rabi Sankar, the bank’s deputy governor says that ponzi schemes and cryptocurrencies have a lot in common. Both are not regulated and have to be banned. This, according to him is the prudent course of action that the Indian government should take.
He made these statements in an address on Monday, February 14th and also said that cryptocurrencies cannot be defined as assets, currencies, or commodities. They are not real or financial assets. They are not even digital assets and hence beyond regulation like the financial industry.
Sankar feels that when crypto is regulated we greenlight its use and assign it value and treat it like a regular currency in some instances. Just regulating it would encourage people to adopt and use it within a government’s regulatory framework. He likened it to drug trafficking – even though it is banned, people still do it.
He believes that letting crypto exist in the same ecosystem as legalized currency will have a destabilizing effect on the fiscal and monetary stability of a country. When crypto is regulated as intended, it would be a good asset to invest in.
India is one among many countries where companies in the crypto field as well as lawmakers have demanded more clarity to regulate and guide their activities. If this clarity is not available, it would be difficult for any business to make long term plans for their products and also stay on the right side of the law.