India Reserve Bank Governor Calls for Crypto Ban After Labeling it as ‘Gambling’

  • RBI Governor Shaktikanta Das said crypto’s price is based on “make-believe”
  • Das is worried that crypto cannot be regulated and is used by scammers
  • Das cited the collapse of FTX as a reason to get rid of cryptocurrency
  • Despite the criticism, India recently rolled out centralized crypto technology
crypto price table
The Governor of the Reserve Bank of India is calling for a ban on cryptocurrency after saying that it is nothing more than a form of gambling. [Image: Shutterstock.com]

India crypto ban approaching?

The Governor of the Reserve Bank of India (RBI) has called for a complete ban on crypto after labeling it as “nothing but gambling.”

market price of cryptos is based on make-believe”

“Every asset, every financial product has to have some underlying (value), but in the case of crypto there is no underlying [value],” said RBI Governor Shaktikanta Das. “The increase in the market price of cryptos is based on make-believe.”

Das said that his belief reflects that of the entire RBI. He also said that the continued use and expansion of cryptocurrency could ruin the stability the RBI provides to the country as it would no longer have control of the flow of money.

Warning signs

Das’ comments were delivered during a Business Today event. Among his many controversial comments, he likened crypto to the 1630’s Dutch tulip bulb craze, during which bulb prices skyrocketed before suddenly collapsing in just a few short years.

The RBI is worried that crypto would destabilize central banks by preventing them from having authority over the country’s monetary policy. That leads to long-term concerns about financial stability and regulation.

this whole thing is likely to collapse sooner than later”

“Please believe me, these are not empty alarm signals,” said Das. “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.”

FTX is the common abbreviation for FTX Trading Ltd., a once-popular crypto trading platform that was forced into bankruptcy last November. A rush in customer withdrawals led the company to reveal that it did not have enough assets to meet its patrons’ requests. 

The FTX situation was similar to the start of the Great Depression. A variety of financial policies and economic situations, most notably the collapse of the stock market, left Americans rushing to banks to withdraw their money. It didn’t take long for banks to run out of money, and there was no central regulator to back them up.

Global trajectory

Despite warning against crypto since 2021, Das has expressed support for Central Bank Digital Currencies (CBDCs) and blockchain technology. India also rolled out the first iteration of its CBDC program last November, yet the RBI’s official stance is that cryptocurrency is a massive risk rife with volatility and scams.

Crypto trading is also heavily taxed in India. In 2022, the government claimed 30% of gains and 1% of all transactions during crypto trading.  

will review the implications of crypto on global and local economies

India is planning to coordinate the worldwide regulation of crypto through G20, which is a panel of governments from 19 countries and the European Union that deals with issues affecting the global economy. Federal economic affairs secretary Ajay Seth said last year that the group will review the implications of crypto on global and local economies before deciding on a policy.

Crypto has infiltrated many mainstream forms of consumerism in recent years. Aside from standard day trading, crypto technology has been incorporated into NFTs and other blockchain-based entities. It has also been used by criminals to launder money since it is easier to remain anonymous.
At the same time, crypto is becoming widely endorsed. Global entertainer Drake has hosted gambling streams in partnership with crypto-based gambling platform Stake, while other Twitch streamers also have locked up deals with crypto-based entities.