Small investors will lose money if the crypto market crashes, according to RBI Governor Shaktikanta Das. A number of people are reportedly deterred from investing in cryptocurrencies due to the central bank’s warnings, he said.
RBI Governor’s Crypto Warnings
In an interview with ET Now earlier this week, Shaktikanta Das, governor of the Reserve Bank of India (RBI), warned against investing in cryptocurrency.
While the RBI has warned investors about the risks of cryptocurrency investing on several occasions, Das said: “As a result of the Reserve Bank’s concerns, I believe that a large number of people have taken notice of those warning signals.” Further, he said:
The cautions and concerns emanating from the Reserve Bank are likely to have discouraged many people from investing in crypto or pulling out of it.
“Cryptocurrencies, as we have said before, can create a lot of financial instability for central banks when they decide monetary policy”, the RBI governor continued. “As a result, the exchange rate will be adversely affected, capital flows will be adversely affected, and the banking sector will be unstable.”
Further, Das warned that cryptocurrency could be used for money laundering and illicit money transfers. In addition, Das reiterated his previous statement: “I mentioned once that it has no underlying structure, not even a tulip.”
According to the governor of the Indian central bank:
The price of something without an underlying will fluctuate, and it has fluctuated, so ultimately… it is the smaller investors are at risk, and so the risk is high for them.
According to Das, cryptocurrency poses a clear threat. The market sell-off in May prompted him to issue a warning about crypto.
“We have consistently warned against crypto and look at what has happened now,” commented the governor following the collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST).
Bitcoin and Ethereum are among the cryptocurrencies that the RBI recommends that the Indian government ban. Nirmala Sitharaman, the Indian Finance Minister, said that international cooperation is crucial to both banning and regulating.
Cryptocurrencies in India are still not regulated specifically. Despite several years of effort, the Indian parliament has not yet taken up the crypto bill. As authorities investigate several crypto exchanges for money laundering, the finance minister urged crypto investors to exercise caution.
