The Indian government has displayed antipathy and opposition towards cryptocurrency for a long time and Indian central bank governor Shaktikanta Das had stated earlier that he wants crypto to be banned.
The reason behind this antagonism is that Das believed that if crypto was allowed to flourish in a country like India, which happens to be plagued with financial ill-practices, it could disrupt and hamper the traditional financial system.
Very recently, speaking at the BFSI Insight Summit 2022, Shaktikanta Das said that the private digital asset market can cause a potential local financial crisis. He also referred to the recent colossal fall of FTX, the crypto exchange, as proof of the industry’s “inherent risks.”
Das proceeded to say:
Unlike any other product, our main concern about crypto is that it doesn’t have any underlying (value) whatsoever.
As the Indian government readies itself to bring regulations for digital assets in place, these words by the Governor of the Indian Central Bank reflected the thoughts of other central bankers and financial leaders.
They collectively believe that private digital assets have no underlying value. Additionally, it is a risk to the macroeconomic stability of the economy.
This Could Pose A Challenge To Indian Crypto Users
The comments by the financial leaders echo that it could be a difficult year for millions of crypto owners who are already burdened by the global financial crisis and increased domestic taxes.
The Indian government has been scrutinising the crypto industry ever since technology ventured into the local market almost a decade ago. The reason why digital assets fell under the radar of financial institutions can be tied to several cases of fraudulent transactions, which caused the central bank to ban crypto in 2018.
Despite India’s Supreme Court lifting the restrictions after two years of the blanket ban, the introduction of a 30% tax on the profits from trading private cryptos was a major setback to crypto owners. This year, the trading volume of crypto in India has shrunk by at least 10 times from its previous numbers.
Terror Funding Remains The Biggest Concern For Indian Regulators
Last month, Indian Prime Minister Narendra Modi ordered stricter and more stringent regulation of private digital assets in order to reduce terror funding in the economy.
Narendra Modi mentioned that Bitcoin presents risks to the young minds of the country and that private virtual currency can pose serious threats to the younger population. According to Modi, if private digital assets fall “in the wrong hands” that could “spoil” the youth of the nation.
The Central Bank of India and the Reserve Bank of India this year initiated the launch of their own digital rupee based on blockchain technology. This was introduced in order to reduce the costs involved in commercial transactions through a declining reliance on paper currency.
Featured image from Unsplash, chart from TradingView.com