Why RBI Governor Said Cryptocurrencies Should Be Banned in India?

Reserve Bank Of India (RBI) Governor, Shaktikanta Das pushes his Crypto skeptic views forwards as he recently suggested that cryptocurrencies should be banned in India. He added that the ban is essential because the growth of cryptocurrencies will cause RBI to lose control over the Indian economy.

In a recent event, Das said that if cryptocurrencies are legalized then it would lead to dollarisation of the Indian economy. Comparing crypto trading with gambling, he claimed that cryptos are solely based on speculations.

RBI Governor noted:

"Cryptocurrencies have the potential to become a means of exchange for doing a transaction. Most of it is dollar denominated and if one allows it to grow, which means 20 percent of the transactions is happening through crypto, that means it is not happening by the central bank and it is issued by private companies all over the world."

Nevertheless, he did support the underlying blockchain technology and said that technology has several other applications. Speaking on Central Bank Digital Currency(CBDC), Das stated that the IT systems of banks must be robust-built and must also focus on data privacy for creating a conducive environment for the digital currency.

As for India's views on crypto, the government has always been apprehensive towards crypto due to its decentralized nature. But with the recent insolvencies of crypto firms, the criticism has only turned louder. If that was not enough, crypto scams especially via Telegram do a lot of damage to those wanting to explore cryptocurrencies.

However, on the ground level, usage of cryptos continues to grow as an August 2022 report suggested that over 115 Million i.e, about 7.3% of the Indian population owned crypto currencies back in 2021.

Amidst all of these, the upcoming Union Budget 2023-24 is expected to bring in some more clarity on crypto regulations and taxations.