Reserve Bank of India Governor says investors are heeding warnings against investing in digital assets
The Reserve Bank of India’s timely warning to investors to beware of digital assets has yielded results, central bank governor Shaktikanta Das has said.
In an interview with local media ET Now, Das said that he is delighted with the outcome of the RBI’s warnings about the risks in the digital asset market. The advisory is prompting many investors not to invest or to pull out of the market.
“I’m glad we sounded those warning signals. Anecdotally, I am aware that many people either did not invest in crypto or somehow exited crypto thanks to caution and concern emanating from the Reserve Bank,” Das said.
The governor also reiterated the RBI’s long-standing position that India’s best course of action to protect investors would be to ban digital assets in the country.
The central bank has issued several warnings since its July financial stability report, which described digital assets as an emerging threat to the country’s financial system due to their high volatility, lack of borders and lack of regulations.
The bank also warned that digital assets could dollarize the Indian economy as the market is mostly denominated in US dollars and issued by foreign entities.
The RBI’s Solution to the Proliferation of Digital Assets
The RBI has long opposed the digital asset market. In 2018, it banned traditional banks from providing services to companies in the sector. The directive was overturned in 2020 by the Supreme Court. However, banks continued to treat the sector with uncertainty.
Some digital asset companies have alleged that the country still maintains a strong shadow ban on the industry. According to Coinbase CEO Brian Armstrong (NASDAQ: PIECE OF MONEY), which had to terminate its operations in the country after the National Payments Corporation of India removed it from the UPI system, the country lacks regulatory clarity for digital assets.
Meanwhile, the RBI has backed central bank digital currencies to replace digital currencies. T. Rabi Sankar, the Deputy Governor of the RBI, told an International Monetary Fund panel that a CBDC could undo the currently revolutionary use cases and benefits of blockchains and digital assets.
Watch: The presentation of the BSV Global Blockchain Convention, CBDC and BSV
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