Cryptocurrencies Akin To Ponzi Schemes: Reserve Bank Of India

Cryptocurrencies are akin to Ponzi schemes or worse and banning them is the most sensible option for India to avoid the threat they pose to financial and macroeconomic stability, a deputy governor at the Reserve Bank of India (RBI) said on Monday, Reuters reported.

Photo Insert: The Reserve Bank of India

Monday's comments from T. Rabi Sankar followed a similarly withering assessment of digital currencies by RBI Governor Shaktikanta Das only days after the Indian government established a taxation framework for cryptocurrencies.

"We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi schemes, and may be even be worse," Sankar said in a speech.

Crypto exchanges and investors have been arguing for the regulation of cryptocurrencies as an asset and the government's recent budget announcement to tax gains from these has raised hopes that they will not be banned.

Sankar, however, dismissed the suggestion that these highly volatile virtual coins should be regulated and instead called for an outright ban.

"Cryptocurrencies are not currencies, financial assets or real assets, or even digital assets. Therefore, it cannot be regulated by any financial sector regulator. It is not possible to regulate something that one cannot define," he said. "All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India."

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