• The RBI deputy governor demands regulation of cryptocurrency, not regulation.
• Sankar says crypto will disrupt the country’s macroeconomic stability.
• India’s debate on crypto legalization or banning is still ongoing.

On Feb. 14, Reserve Bank of India’s Deputy Governor T. Rabi Sankar called for the complete ban on cryptocurrency before his fellow bankers.

It comes just days after the Union Budget had proposed to tax cryptocurrency. This raised concern among other financial specialists. During his speech, Sankar drew a parallel between Ponzi schemes and cryptocurrency, and said banning it is the “most advisable choice” for the Government of India.

Sankar noted that giving cryptocurrency the opportunity to exist in a country where fiat money is prevalent, “a destabilizing effect on the monetary and fiscal stability of a country” would be inevitable. Sankar also stated that crypto could be regulated, which would make it an investment asset and increase its value. This would lead to more Rupee users.

The deputy governor disputed the value of cryptos, saying:

The value of cryptocurrency assets is not anchored in monetary policy or its status as legal tender. Its only value rests on the hope that others will use and value them.

A RBI official insists that cryptocurrency use would be encouraged if it was simply controlled by government. Sankar is aware, however, that crypto patrons will still support its use despite imposing a ban on the use of virtual currency, the same as “drug trafficking is a rampant phenomenon despite a ban.

India is one country where legislators and blockchain companies are engaged in a heated debate about cryptocurrency regulation. The decision whether to allow or deny cryptocurrency use is in an extended regulatory limbo. Nirmala Sitharaman, finance minister of India, promises that further discussion will be held on the subject.

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