T. Rabi Sankar, Deputy Governor of the Reserve Bank of India, claimed:
“We believe that CBDCs would be able to kill whatever little case there could be for private cryptocurrencies.”
He went on to say that cryptocurrencies are backed by technology and can be used for both good and bad purposes.
RBI A Threat To India’s Financial System?
The Indian government is still working to improve its cryptocurrency policy and regulations. The RBI has always been sceptical of cryptocurrencies, viewing them as a threat to India’s financial system.
They are aware of how widely popular and accepted cryptocurrencies are, even by celebrities, influencers, and public officials, and they believe that adopting crypto will eventually lead to the demise of rupees and the great monopoly of the US dollar.
Sankar goes on to say that any currency should have intrinsic value as well as a central authority or issuer. Hence, cryptocurrencies that lack these critical characteristics should not be accepted by investors or policymakers.
Sankar is concerned about the acceptance of cryptocurrencies with no intrinsic value. He’s even perplexed why crypto players accept stablecoins pegged to certain currencies. The growing popularity of cryptocurrency and NFT is viewed as a threat to India’s sovereignty and economy.
Crypto total market cap at $1.20 trillion on the daily chart. Source: TradingView.com
RBI To Launch Digital Rupee
Rupee Sankar’s opposition to mainstream crypto bolsters the Indian government’s refusal to adopt them.
In this light, the Indian central bank is taking a slow yet steady approach to developing and launching its own CBDCs. The consultation paper examines the different regulations and policies that other countries have in place.
What do the major crypto players have to say in response to the RBI’s statement?
Crypto players remain unfazed by these statements, claiming that the RBI is simply projecting the untamed power of cryptocurrency. It appears to be a threat to India’s economy, and the RBI is on guard.
As India moves towards CBDCs, the government has also started to develop laws and regulations in line with crypto adoption. Profits from cryptocurrency investments are currently subject to a 30% tax rate.
