Crypto trading is like a Ponzi scheme, the Central Bank of India warns

Bloomberg – In a sharp warning to Prime Minister Narendra Modi’s government, a senior official of the Central Bank of India has reiterated concerns about the comparison of virtual currencies with cryptocurrency trading and Ponzi schemes.

Demanding ban on cryptocurrencies, Deputy Governor of the Reserve Bank of India Rabbi Shankar said digital currencies “undermine financial sovereignty” and “undermine financial integrity”.

“We also saw that cryptocurrencies are not likely to be defined as currency, property or commodity; They have no basic cash flow and they have no intrinsic value; It is like Ponzi schemes and can be even worse, ”Shankar told a bank conference on Monday.

Until now, there are no restrictions on cryptocurrency trading in India. In March 2020, the Supreme Court lifted the ban on the Reserve Bank of India, and since then, cryptocurrency investments in the country have soared. According to an October report by crypto analytics firm Chainalysis, the Indian market grew by 641% from July 2020 to June 2021.

The moment he spoke harshly could not be ignored. It occurs later The government will announce the imposition of capital gains tax on cryptocurrency trading earlier this month, thereby officially recognizing virtual currencies as assets.. Shortly afterwards, RBI Governor Shaktikanta Das, a long-time opponent of cryptocurrencies, expressed concern over India’s volatility due to such volatile practices and said digital currencies did not have basic assets, “not even a tulip”.

India ranks second in cryptocurrency investment. This has increased the Reserve Bank of India’s concerns about money laundering, terrorist financing and the erosion of home savings.

Cryptocurrency trading could “destroy the monetary system, monetary authority, the banking system and the government’s ability to control the economy in general,” said Shankar of the Reserve Bank.

You may be interested in:

Legislation on standard cryptocurrencies would be urgent: US Treasury

SEC warns US investors about high-yield crypto account risk

India approaches crypto with transaction taxes, digital currency

This article was translated by Estefania Salinas Conza.