Cryptocurrency has no underlying value: RBI clears the air, hints at rate hike in next MPC

RBI governor Shaktikanta Das also said that he believes that that the Centre seems to be in sync with the central bank's stance on cryptocurrencies

RBI governor on crypto

NewDelhi: Cryptocurrencies: Reserve bank of India governor Shaktikanta Das on Monday, May 23, made clear India’s stance on cryptocurrencies by saying that “Cryptocurrency has no underlying value”.  The RBI governor said that the central bank had for long been cautioning against cryptocurrency, and it has now crashed.

RBI governor said people would have raised questions after the cryptocurrency market crash had the RBI been regulating the digital assets by now. “We have been cautioning against crypto and look at what has happened to the crypto market now.

 “This is something whose underlying (value) is nothing. There are big questions on how do you regulate it. Our position remains very clear, it will seriously undermine the monetary, financial and macroeconomic stability of India," the RBI Governor added.

Read more: Is crypto currency (Bitcoin) bubble about to burst?

He said since it has no underlying value and it is unpredictable and volatile as well. How can an asset class fluctuate 30-40% in a day?  Recently, the cryptocurrency market has witnessed a crash and huge downturn with the world’s leading cryptocurrency Bitcoin eroded more than 50% value from its all-time high of $69,000 and is trading at $27,000.

Shaktiknta Das also said that he believes that the Centre seems to be in sync with the central bank’s stance on cryptocurrencies that they have no underlying value. The RBI has for quite some time said that cryptocurrencies have no underlying value, with the governor saying that they compare to ‘not even a tulip’.

Das said that the RBI has not imposed any shadowban on crypto exchanges. In its initial days, when Bitcoin was slowly making its mark in India, the RBI had planned to ban cryptocurrencies in India. However, a Supreme Court order in 2018, overturned its ban on cryptocurrencies, and since then the RBI has maintained a tight stand on digital assets. RBI regularly flagged concerns about the impact of cryptocurrencies on the macroeconomy in India.

The government is also reluctant in accepting cryptos

In the last Union Budget FM Nirmala Sitharaman proposed a 30 percent tax on trading in cryptocurrencies and related assets, with 1 percent TDS on such transactions making it almost unviable for traders.

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