On Thursday, Shaktikanta Das, Governor of Reserve Bank of India, warned against investing in cryptocurrency. He reminded investors that cryptocurrencies CryptocurrenciesBy using Cryptography, virtual currencies,…Read this Term have not underlying value and not even a “tulip,” referring to a speculative boom.
Just days after India established a taxation framework to tax crypto coins, the governor of India’s Central Bank gave an adamant assessment of the digital currency craze. India’s government had just read the proposed budget for 2022-23. The authorities imposed a 30% tax upon gains from cryptocurrency trades. Crypto advocates who had feared that the government would ban all cryptocurrency trades in the past, saw the taxation as an acceptance by the authorities.
Das warned investors about the risks associated with cryptocurrency during the news conference. He said: “Private cryptocurrency is a huge threat to macro-economic stability and financial stability…investors should keep this in mind that they are investing at their own risk. These cryptocurrencies don’t have any underlying value – not even a single tulip.
The Central Bank Governor stated that it was his “duty” as a cautionary agent to investors and advised them that they were investing at their own risk in crypto coins.
Preparation for Launching Digital Rupee
India’s Central Bank repeatedly warned of crypto risk. India’s Prime Minister NarendraModi warned that cryptocurrency could “spoil our young people” in November 2017. Unregulated cryptocurrency markets could be used to finance terror, fraud, and money laundering, as the government has warned repeatedly.
Late last year, The Directorate of Enforcement, India’s agency tasked with fighting financial crime, said that it was investigating at least eight cases of cryptocurrency-related frauds. The RBI warned that private cryptocurrency could threaten its ability to maintain financial stability. The Central Bank is in the process of launching its digital currency next year. Nirmala Sitharaman (India’s finance minister) recently stated that the Central Bank of India will launch a digital rupee version in the next financial years. He said that the central bank’s digital currency (CBDC), would boost the digital economy as well as make it easier and more cost-effective to manage currency.
Many locals continue to trade crypto, despite warnings by the government and plans for a digital rupee. India is home to between 15 and 20 million crypto investors.