Cryptocurrencies are clear danger, says RBI Governor

Reserve Bank Governor Shaktikanta Das on Thursday described cryptocurrencies as "clear danger" and said that anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name.

The government is in the process of finalising a consultation paper on cryptocurrencies after gathering inputs from various stakeholders and institutions.

Reserve Bank of India (RBI) has been flagging concerns about cryptocurrencies, which are seen as a highly speculative asset.In the foreword to the 25th issue of the Financial Stability Report (FSR) released on Thursday, Das also said that as the financial system gets increasingly digitalised, cyber risks are growing and need special attention.

RBI first come out with a circular regarding cryptocurrencies in 2018 and had barred entities regulated by it from dealing in such instruments. However, in early 2020, the Supreme Court struck down the circular.

While regulatory clarity is yet to emerge with respect to the cryptocurrency space in the country, the government is working to finalise a consultation paper on cryptocurrencies with inputs from various stakeholders and institutions, including the World Bank and the IMF.

In the foreword of the FSR, Das also said that while technology has supported the reach of the financial sector and its benefits must be fully harnessed, its potential to disrupt financial stability has to be guarded against.