Nothing but gambling…: RBI guv Shaktikanta Das on why crypto is dangerous

Speaking at Business Today event,  he said, “Every asset, every financial product has to have some underlying (value) but in the case of crypto there is no underlying… not even a tulip…and the increase in the market price of cryptos, is based on make-believe. So anything without any underlying, whose value is dependent entirely on make-believe, is nothing but 100 per cent speculation or to put it very bluntly, it is gambling,” the governor said.

“Since we don’t allow gambling in our country, and if you want to allow gambling, treat it as gambling and lay down the rules for gambling. But crypto is not a financial product,” Das asserted.

RBI recently launched its own digital currency (central bank digital currency), in the form of e–rupee on a pilot mode, first for the wholesale in late last October and a month later for retail customers.

Explaining how dangerous they are, the RBI governor said, “One year ago in the Reserve Bank, we had said this whole thing is likely to collapse sooner than later. And if you see the developments over the last year, climaxing in the FTX episode, I think I don’t need to add anything more,” Das said.

Speaking on the safety of digitization of payments, Das said banks have to ensure that they are not swallowed by big tech which today control most digital transactions.

“Issues of data privacy and issues of robustness of the tech infrastructure of banks have to be the focus of banks. Since many banks are actively engaged with many big tech, their challenge is to ensure that this should not lead to a situation where banks are swallowed up by the big tech. Banks should take their own decisions and not to be allowed to be dominated by big tech,” Das said.