The Reserve Bank of India governor Shaktikanta Das launched a tirade against cryptocurrency saying they have no underlying value as such and hence investing in those is always fraught with danger. Das also referred to the Dutch tulip bulb market bubble in the 17th century to underscore the hollowness of all the rumble surrounding the crypto coins at the moment, saying they are worth ‘not even a tulip.’
The RBI governor has always been known to be a staunch opponent of digital currency and has even termed those a threat to the financial stability of the country as well. Interestingly, Das’s latest salvo against the digital currency has come within days of the Finance Minister proposing imposing a rather steep 30 percent taxation on all transactions involving digital currencies.
The logic behind such a tax structure is that the government is treating any profit made from it to be at par with gambling, something that might be legal but is not encouraged either. That said, such a tax structure acted to allay the fears of investors who were apprehensive of the government banning cryptocurrency trading in India. Rather, Finance Minister stated they are working to devise a regulatory structure to keep a tab on crypto.
The governor meanwhile pointed out how the digital currency can fuel illegal activities given that those can be traded anonymously. Plus, there are no regulations in place to keep a tab on digital currencies at the moment, which means there is little the government can do against someone who indulges in illegal activities and gets paid in digital coins. This is especially true for a country like India given the myriad security challenges the country faces. Plus, crypto can fund terror activities as well.
Meanwhile, RBI sources also said they are working to develop its own digital rupee as well which they hope can take much of the sheen off the digital currencies. The central bank declined to commit to a fixed timeline by which the digital rupee would become operational. Finance Minister Nirmala Sitharaman though had stated during her budget presentation that the digital rupee would be ready during the next financial year itself.