22. February 2024

RBI Governor Calls for Outright Ban on Cryptocurrencies

• Reserve Bank of India Governor Shaktikanta Das wants an outright ban on cryptocurrencies due to their association with terror funding and lack of clear definition.
• He believes that these asset types cannot be considered as financial products and must be treated as “gambling activities.”
• The RBI has also launched its own central bank digital currency (CBDC) late last October.

The Reserve Bank of India (RBI) is taking a strong stance against cryptocurrencies, with Governor Shaktikanta Das calling for an outright ban. In a speech at a conference on Friday, he made it clear that the RBI’s stance on digital currencies remains unchanged.

Das argued that cryptocurrencies are not to be considered as a financial product and should instead be treated as “gambling activities.” His remarks come in the wake of reports that the system implemented by the now-defunct exchange FTX has failed, and rumors about the RBI’s own central bank digital currency (CBDC).

The Governor stated that the definition of cryptocurrencies is unclear, and that the commonly known danger of terrorism funding which is associated with these asset types should be a major cause of concern. He commented that some may call it an asset while others may call it a financial product, but in the case of crypto, there is no underline.

The RBI has shown that it is not taking this issue lightly, with a recent statement saying that “Crypto is not a financial product then, therefore it’s masquerading as a financial product or asset is completely a misplaced argument.”

In an effort to tackle the issue of digital currencies, the RBI has taken a lead over other central banks by launching its own CBDC late last October. It is clear that the Indian government is cracking down on the use of cryptocurrencies, with Das’s comments further reinforcing this stance.

The Governor did not provide any details on how the ban would be enforced, but the RBI has made it clear that they are taking a strong stance against the use of digital currencies in India. With the introduction of their CBDC, the bank is hoping to provide a better alternative to digital currencies, one that is regulated and has a clear definition. It will be interesting to see how this situation develops in the coming months.