Cryptocurrencies – An assessment

Keynote address delivered by Deputy Governor, Reserve Bank of India Mr. T Rabi Sankar on February 14th, 2022 at the Indian Banks Association 17th Annual Banking Technology Conference and Awards

Conclusion

Banning cryptocurrency is perhaps the most advisable choice open to India, since:

1. Crypto-technology is underpinned by a philosophy to evade Government controls

2. Cryptocurrencies have specifically been developed to bypass the regulated financial system

3. 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 even be worse

4. They undermine financial integrity, especially the KYC regime and AML/CFT regulations and at least potentially facilitate anti-social activities

5. More substantially, they can (and if allowed most likely will) wreck the currency system, the monetary authority, the banking system, and in general Government’s ability to control the economy.

6. They threaten the financial sovereignty of a country and make it susceptible to strategic manipulation by private corporates creating these currencies or Governments that control them

7. The arguments proffered by those advocating that cryptocurrencies should be regulated do not stand up to basic scrutiny.