The Central Bank of India has warned that many cryptocurrency projects may be subject to financial collapse, since due to the lack of regulation, investors cannot count on protective measures against possible monetary losses. Central Bank researchers emphasized that users’ interest in cryptocurrencies is driven by speculative motives, and not by the ability to use cryptoassets to make money transfers and payments.
RBI Governor Shaktikanta Das noted that some cryptocurrencies can be backed by an underlying asset: government currency or precious metals. However, if this underlying asset is another volatile digital asset that does not have central bank support, there could be a crisis in the crypto space.
Das noted that decentralized finance (DeFi) continues to evolve and interact more closely with the traditional financial system. Therefore, it is necessary to carefully analyze the risks of DeFi.
“Crypto assets and private cryptocurrencies are now fashionable terms to describe activities that in 100% of cases are monetary speculation and fraud,” Das said.
Cryptocurrencies are still unregulated in India, so late last year the RBI proposed a complete ban on them. At the same time, the Indian government supports blockchain and is exploring the possibility of launching a digital rupee (CBDC). Testing of a CBDC in India began in late 2022, and Das cited the key features of the Central Bank digital currency as anonymity, ease of use, fast settlement speeds and cheap transactions. In May 2023, the RBI included more commercial banks in pilot testing of the digital rupee.
Source: Bits
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