Cryptocurrency investors rejoicing in India after the recent jump in valuations globally, take note. Reserve Bank of India (RBI) Governor Shaktikanta Das has a ‘warning’ for you. This crypto ‘party’ is not without risks, said Das. He made these remarks at the World Economic Forum in Davos.
Despite recent surges in cryptocurrency prices, Das cautioned investors, raising concerns about the potential harm these “instruments with no underlying value” pose to emerging market economies like India. Das’ remarks come just days after the US Securities and Exchange Commission approved bitcoin exchange-traded funds. “While others might see a renewed cryptocurrency party, we see significant risks,” Das stated. He emphasized that India’s regulatory approach would not simply mirror other countries’ decisions, adding: “They (the US SEC) are responsible for their nation’s well-being, and we for ours.”
This is not the first time that the RBI governor has expressed caution about Cryptocurrencies. Das has consistently warned about cryptocurrencies’ potential to endanger financial stability and trigger a global financial crisis. Responding to a query about crypto’s future in India, he offered a two-word “very bad” before elaborating on his concerns.
“Some celebrate this as a new party, but they forget the crash a few years ago. Volatility, money laundering, and terror financing risks are inherent in these assets,” he explained.
Turning to India’s economic outlook, Das acknowledged the challenge of food inflation, attributing its volatility to global supply chain disruptions and unpredictable weather events. Significant spikes in food prices during the past year have contributed to inflation exceeding the RBI’s 4% target. Das highlighted the impact of heavy rains and floods on vegetable prices but reassured that the central bank remains vigilant in addressing these fluctuations.
India bans URLs of 9 crypto exchanges, including Binance
Late last month, the Financial Intelligence Unit (FIU), which comes under the Finance Ministry, issued a show cause notice to nine offshore crypto exchanges. It also asked the Ministry of Electronics and Information Technology (MeitY) to block their URLs in India. The action has been taken for alleged non-compliance with Indian anti-money laundering law. As per the notice sent out by FIU, these nine crypto exchanges have been operating illegally in India. The nine exchanges that have received the show cause notice are: Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex.