Cryptocurrencies akin to Ponzi schemes, says Reserve Bank of India deputy, suggests national ban
- RBI Deputy Governor T. Rabi Sankar suggested that cryptocurrencies are not definable as currencies, assets or commodities and that a ban may be best for India
- Sankar said he does not accept that cryptocurrencies must be permitted for the development of blockchain technology
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 regulation of cryptocurrencies as an asset and the government’s recent budget announcement to tax gains from these has raised hopes that the 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, or 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.”