It remains unclear what the Indian government is now up to in terms of regulating the crypto industry. Today, the Indian central bank is again adding fuel to the fire. They state that cryptocurrencies pose a threat to the financial system and that they actually have no intrinsic value at all.
Indian central bank and crypto
The central bank acknowledges that crypto has grown in popularity over the past few years, but is issuing a stern warning to investors. According to the bank, cryptocurrencies cannot be seen as currency at all, nor as financial assets. The bank frankly states that cryptocurrencies actually have no value at all. The central bank reports this in their latest Financial Stability Report†
According to the bank, the risks associated with the crypto industry will only grow as the crypto sector continues to grow. According to the central bank, the risks will be so great that the stability of the entire financial system may be endangered.
“Cryptocurrencies are not currencies because they have no issuer, are not a debt instrument or financial asset, and have no intrinsic value. At the same time, cryptocurrencies carry risks.”
Some identified risks are related to a lack of coverage for assets such as bitcoin (BTC) and decentralized finance (DeFi) projects, the bank said. In addition, the Indian exchange sees the strong correlation of the crypto market with the stock market as another major pitfall
“In the past, private currencies have led to instability over time and in the current context to ‘dollarization’, as they create one or more parallel currency systems that maintain sovereign control over the money supply, interest rates and macroeconomic stability. can undermine.”
Strict regulation of the crypto industry is needed
In addition, according to the Indian central bank, it is of great importance that the crypto industry will be clearly regulated in the short term. They argue that legislators and policymakers should focus primarily on the raised risks of the crypto world, but also the impact of the crypto sector on the climate.
