India’s financial regulator, the Reserve Bank of India (RBI), has cautioned about cryptocurrency. The RBI governor has issued warnings against investing in the crypto market following the collapse of the Terra network.
According to RBI governor Shaktikanta Das, the market is too risky after the recent meltdown. Investors have lost billions of dollars worth of crypto assets over the past week.
The Crypto Industry and Regulations
In an interview with CNBC TV18 on Monday, the RBI governor discussed the crypto space and challenges in regulation. Das noted that the Indian government warned against crypto before the latest incident.
Das added that had the government been regulating the industry, people would be able to ask questions. People would have raised questions about the government’s role in preventing issues like this.
While describing digital currencies, the RBI governor believes it is something without any underlying value. Cryptocurrencies have no threshold to measure their worth, so they are worthless.
However, Das concedes that the big question is how the government regulates it. The government’s position is clear about the effect of crypto on the economy. The use of cryptocurrency undermines the country’s monetary policy and financial stability.
The Central Bank of India has been opposed to cryptocurrency for a long time. According to them, the Indian economy risks being dollarized due to crypto. Das maintained that the Indian government supports the central bank’s position regarding cryptocurrency.
Meanwhile, the Reserve Bank of India and the Central Bank of India have conveyed their position to the government. Das expects the decision-makers to conclude the next step they should take.
Das believes that the utterances from the government show that they are in sync with the regulators. They are all concerned, and they will make the right call in due time.
Das on Coinbase CEO
The RBI governor was asked about the statement credited to Brian Armstrong, the CEO of Coinbase. The crypto exchange head has previously alleged that Coinbase India restricted a payment service due to pressure from the RBI.
In response, the governor replied that he was not one to respond to speculation made by individuals outside.
Armstrong claimed that Coinbase India disabled the Unified Payment Interface (UPI) system shortly after launch. The RBI is seen as the reason behind the decision by Coinbase India to suspend the service.
The Crypto Market Plunges
Since November last year, the crypto market has shed more than $1.5 trillion and close to $500 billion in May. The current market slump was a spillover effect of the collapse of the Terra ecosystem.
The native token LUNA and the stablecoin Terra UST dropped more than 80% of their value. Since then, the market has been looking for a way to recover from the enormous losses.
Nonetheless, the Indian government has been extensively working on implementing crypto regulations. The strict tax levied against the industry is a sign of what will come in the future.