India’s central bank chief has expressed concern about cryptocurrencies and said they could pose a threat to the country’s financial stability.
Reserve Bank of India Governor Shaktikanta Das said, “When the central bank says that we have serious concerns from the point of view of macroeconomic and financial stability, there are far deeper issues involved.” He lamented that no “serious, well-informed discussions” were taking place in the public space on these issues. Blockchain technology is 10 years old and it can grow even without cryptocurrencies, he added.
This is the second time in a week the top banker has raised his objections to virtual currencies. A few days ago, Prime Minister Narendra Modi held a meeting on cryptocurrencies amid worries over misleading claims of huge returns on investment.
A parliamentary committee on finance recently held a meeting with the members of the crypto industry and Chairman Jayant Sinha has said that he will welcome regulations for cryptocurrency that will allow India to harness the power of new technology. The members of the committee were in favor of regulating cryptocurrency exchanges, rather than instituting an outright ban.
A Press Trust of India report had stated that the government is likely to introduce a bill on cryptocurrencies during the winter session of Parliament beginning November 29. Currently, there is no ban or curb on the use of cryptocurrencies. The proposed bill is likely to focus on investor security.
The central bank governor had recently said that the number of crypto accounts in India was exaggerated, with a majority of the accounts being of small denominations of 1,000 rupees or even less. “We have received a lot of feedback that credit has been provided to open accounts and various other kinds of incentives are being provided to open accounts, but the total account balance is just about 500, 1,000 or 2,000 rupees, and that covers about 70 to 80% of the accounts,” he said.
Former Reserve Bank deputy governor N S Vishwanathan has said that the central bank is circumspect about the introduction of cryptocurrencies because of concerns over lack of clarity on valuations and the possibility of money laundering.
A recent study by investment portal BrokerChooser had said India has the largest number of cryptocurrency owners in the world. Most of them are aged below 35 and many are signing up out of curiosity and the desire to get rich quickly.
Despite the uncertainties surrounding the industry, crypto startups are able to attract funding and two exchanges, CoinDCX and CoinSwitch Kuber, have attained the elite unicorn status.