'They pose a risk': RBI Governor Shaktikanta Das' view on cryptocurrency

By Team Newsable | First Published Feb 10, 2022, 5:54 PM IST

RBI governor Shaktikanta Das stated that private cryptocurrencies constitute a danger to macroeconomic and financial stability and that individuals who invest at their own risk should be aware of the risks.

The Reserve Bank of India has warned investors about the risks of private cryptocurrencies in India once more. In a post-monetary policy news conference, RBI governor Shaktikanta Das stated that private cryptocurrencies constitute a danger to macroeconomic and financial stability and that individuals who invest at their own risk should be aware of the risks. "Private cryptocurrencies, by whatever name you call them, pose a risk to our macroeconomic and financial stability. They would jeopardise the RBI's ability to deal with financial and macroeconomic stability challenges," Das told reporters. Investors should keep in mind that they are investing at their own risk, he added.

The governor warned investors that such assets had no underlying value, "not even a tulip." Previously, the Union Budget suggested a 30% tax on virtual digital assets such as Bitcoin and Ethereum. Furthermore, the buyer is required to withhold tax at the rate of 1% on payments made for the acquisition of such item. Furthermore, earnings or losses on the sale of virtual assets will not be allowed to be offset against other gains or losses. That is, it will be considered as a distinct asset type. During her Budget presentation, Sitharaman also stated that the RBI will establish its own digital currency or digital asset of cryptocurrencies.

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According to industry estimates, India has 15 million to 20 million crypto investors, with total crypto assets of roughly 40,000 crores ($5.37 billion). There is no official statistics on the size of the Indian crypto market. According to an October analysis from Chainalysis, an industry research organisation, the crypto market in India gained 641 per cent in the year to June 2021.
Earlier in the day, the Central Bank left the benchmark interest rate or repo rate – the rate at which banks borrowed from the Central Bank – constant at 4% for the eleventh time in a row and opted to maintain its accommodating policy.

In the aftermath of the coronavirus epidemic, the RBI implemented an ultra-loose monetary policy, and to provide ample liquidity to the economy, it lowered the key rate to a record low of 4%, which it has maintained since May 2020. The governor also forecasted 7.8 per cent of India's economic growth for the fiscal year 2023. The current fiscal year's growth rate remains at 9.2 per cent.

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