Crypto big threat to financial stability; not even worth a tulip: RBI Governor Das
Categories: Crypto News
Reserve Bank Governor Shaktikanta Das on Thursday said cryptocurrencies are a "threat to macroeconomic and financial stability" and cautioned investors against punting on them, days after the Union government's move to tax the gains made from cryptocurrency trades.In the Union Budget for 2022-23 presented in Parliament on February 1, the government proposed levying a 30 per cent tax on gains made on cryptocurrency trades by investors and the announcement was welcomed by cryptocurrency industry players, saying it legitimises their trades. The latest comments from the Reserve Bank of India (RBI) Governor are also a reiteration of institutional concerns on crypto assets."Private cryptocurrencies or whatever name you call it are a threat to our macroeconomic stability and financial stability. They will undermine RBI's ability to deal with issues of financial stability and macroeconomic stability," Das told reporters.RBI has been repeatedly flagging its concerns on such instruments and had banned the banking system from aiding such trades, which was struck down by the Supreme Court in 2020. The 'tulip mania' of the 17th century is often cited as a classic example of a financial bubble where the price of something goes up, not due to its intrinsic value but because of speculators wanting to make a profit by selling a bulb of the exotic flower.Cryptocurrencies are said to originate or 'mined' using complex algorithms built on the blockchain platform but critics say it lacks the 'value' of legal tender whose supply is regulated. After getting mined by running a programme, units of cryptocurrencies are traded in the secondary markets where their value has been very volatile.