The former Reserve Bank of India (RBI) governor Raghuram Rajan believes most of the existing cryptocurrencies will soon perish.
Around 6,000 cryptocurrencies are in existence and Rajan believes that only one or two, or at most a handful, would survive. In an interview with CNBC-TV18, Rajan said that if things have value only because they will be pricier down the line, it is a ‘bubble’. “A lot of cryptos have value only because there is a greater fool out there willing to buy,” he said.
The government of India, in the winter session of the Parliament, will be moving a bill to frame rules for cryptocurrencies aimed at prohibiting private coins while providing a framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI).
Crypto Bill: Centre all set to ban private cryptocurrencies in India, allow RBI digital coin
The government would introduce a bill to ban all private cryptocurrencies in India while providing certain exceptions to promote the underlying technology of cryptocurrency. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021′ is among 26 new bills on the agenda of the government for the winter session of parliament beginning November 29. The bill seeks to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India.
“The bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the Lok Sabha bulletin said with regard to the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Rajan says cryptocurrencies may pose the same problems as chit funds do. “Chit funds take money from people and go bust. A lot of people holding crypto assets are going to be aggrieved,” he said. Rajan further argues that most cryptos do not have permanent value but that some might survive to provide payments, especially cross-border ones.
Talking about the potential of blockchain technology, Rajan said that the Centre must allow the underlying blockchain technology to flourish.
ET reported earlier this month that India is considering a middle path on cryptocurrencies as it finalises legislation for the winter session. The RBI has expressed reservations over private cryptocurrencies with governor Shaktikanta Das flagging them as a threat to macroeconomic and financial stability.