India has recently declared its provisions for taxation on crypto assets. Within a month of Union Budget 2021-22, an intense comment on the digital currency has been made by the Reserve Bank of India (RBI) Deputy Governor – T Rabi Sankar.

Sankar has advocated a complete ban on cryptocurrency in India, citing that it has no intrinsic value and can be worse than a Ponzi scheme. 

In addition, the RBI DG argued against the positive sentiments for enabling cryptocurrencies in India, saying none of the crypto assets have done the required scrutiny. 

While speaking at the Indian Banks Association 17th Annual Banking Technology Conference & Awards on Monday, Rabi Sankar said:

“It would be beneficial if digital currencies are restricted in India.”

On the statement that advanced economies (AE) have not resorted to banning such currencies, the deputy governor said it is in the interest of those economies not to ban cryptocurrencies. Because cryptos are not a hazard to convertible currencies (most cryptos are priced in dollars as they are to rupees). 

However, Rabi Sankar says that crypto-technology has grown to bypass the regulated financial system. 

It is hard to define cryptocurrency as currency, assets, or commodity. They do not have any underlying cash flow, he further said. 

Lastly, he concluded that these should be enough reasons to keep cryptocurrencies away from the formal financial system. Moreover, they undermine financial integrity, particularly the KYC regime and AML/CFT regulations, and potentially facilitate anti-social activities. 

Even before T Rabi Sankar, banker’s banks have spoken against the recognition of cryptocurrencies. It has been said repeatedly that recognizing cryptocurrencies will impose threats and would manipulate the security of the country. Apart from this, they say it is also not beneficial for the economic and financial stability of the country.

The banker’s association has maintained the stance that India needs to ban cryptocurrency for the integrity and stability of its formal financial system.