The Reserve Bank of India (RBI) has once again asserted their objection to cryptocurrencies in a recently published statement. Deeming them a volatile asset and certain danger, the RBI is gearing up to release a detailed report on the A to Z risks of cryptocurrencies, compiled with the help of many organizations.
In the past, the RBI has voiced their anti-crypto stance citing that it could never win over India’s UPI system or Unified Payments Interface apps like Google Pay, Amazon Pay, Paytm, or PhonePe. They constitute India’s indigenous payment system that has skyrocketed in the last few years and RBI believes their ease of use and transparency will halt crypto adoption in the country. Additionally, a segment of the Indian population is even finding accessibility to UPI payments difficult because of low smartphone density that needs to be increased. Due to these reasons, the RBI believes penetration of cryptocurrency is likely to remain low.
Caveat Crypto Investors
The central bank opposed blockchain technology saying their nature circumvents the traditional system of finance and comes with loopholes that have the propensity to deceive the users. In its extremist stance against cryptocurrencies, it listed potentially vulnerable avenues that crypto could take advantage of, including KYC mechanism, fiscal evasion and financial terrorism. The RBI also highlighted lack of consumer protection and investor-friendliness in their report.
Interestingly, the Reserve Bank of India seems to hold contradictory opinions when it comes to sizing up the true risks of the blockchain. There seems to be a disparity in the highly conservative views it holds against cryptocurrency and the incredibly low classification of threat it has assigned to virtual assets and crypto. A comprehensive study conducted by them revealed the top candidates for potentially catastrophic factors that could wreak havoc on the realm of global finance.
The recent trends of escalating inflation and political upheaval around the world were classified as imminent factors. But cryptocurrency took a backseat as the RBI does not think they assert substantial dominance over global finance just yet. Their decentralized nature which makes economies skeptical to adopt them freely also led to the RBI dismissing crypto as possessing major risks in the immediate future. This is perhaps partly due to cryptocurrencies currently occupying only about one percent of total financial assets that belong to the world’s wealth. The bank continues to be one of the strongest dissenters against worldwide crypto take over.