RBI Chief Rejects Following Others, Warns Against Global Crypto Mania

MUMBAI: RBI Governor Shaktikanta Das on Thursday said the central bank does not "emulate" others when it comes to regulations and asserted that the bank's as well as his own opposition to cryptocurrencies remain unchanged, a day after US regulators allowed bitcoin Exchange Traded Funds (ETFs).

He also said that emerging markets and the world cannot afford to have a "crypto mania".

"What is good for another market need not be good for us. Therefore our views -- both that of the Reserve Bank and personally that of mine -- remain the same," Das said.

Addressing a financial sector seminar organised by business daily Mint here, the Reserve Bank of India (RBI) chief also said that for emerging market economies and advanced economies, travelling down that path of cryptocurrencies will create huge risks which will be very difficult to contain going forward.

"The question is why do you want to go down that road? What is it that you are going to get?," Das said while responding to a query about the development in the US with respect to cryptocurrencies.

Personally, Das and RBI, as an institution, are opposed to private cryptocurrencies on the grounds that they pose tremendous threat to the financial stability.

"The US capital markets regulator in the same announcement also issued necessary cautionary advice and necessary warning to investors to be careful along with the risks it poses. Our position, my position and the RBI's position on this remain unchanged irrespective of who does what. Just because someone has done something, we are not here to emulate them," he said.

The remarks were in the context of the US regulator SEC permitting bitcoin ETFs. The approval is seen as a landmark event in the adoption of cryptocurrencies in mainstream finance as the ETF structure gives institutions and financial advisors a familiar and regulated way to have an exposure to bitcoins.

"I don't wish to comment on what a regulator of another country has done; they know what is best for their country. But I would like to say that they themselves have flagged risks in the product and advised people to be very careful.

"We are all familiar with the Tulip mania in the Netherlands that had led to an asset bubble in the past. I don't think emerging markets and the world can afford a crypto mania that could lead to similar outcomes," the governor said.

On whether he sees the forthcoming vote-on-account to be inflationary, Das said that going by the past records of the present government, he feels that the interim budget will not lead to inflationary pressures.

Further, Das mentioned many supply side measures that the government has taken to contain price rise since the beginning of the Russia-Ukraine war.