INSUBCONTINENT EXCLUSIVE:
If cryptocurrencies are banned, investors who are law abiding would desist from investing.Mumbai: Making a strong case for banning
cryptocurrencies, Reserve Bank Deputy Governor T Rabi Sankar on Monday said they are even worse than Ponzi schemes and threaten the
financial sovereignty of a country.Observing that crypto-technology is underpinned by a philosophy to evade government controls, he said
they have been specifically developed to bypass the regulated financial system.More substantially, he added, cryptocurrencies can wreck the
currency system, monetary authority, banking system, and in general the government's ability to control the economy."All these factors
lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India," Sankar said while delivering a
keynote address at the Indian Banks Association 17th Annual Banking Technology Conference and Awards.The Deputy Governor said
crypto-technology is underpinned by a philosophy to evade government controls."Cryptocurrencies have specifically been developed to bypass
the regulated financial system
These should be reason enough to treat them with caution."We have also seen that cryptocurrencies are not amenable to definition as a
currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi schemes, and may
These should be reason enough to keep them away from the formal financial system," he noted.Additionally, they undermine financial
integrity, especially the KYC regime and AML/CFT (anti-money laundering/combating the financing of terrorism) regulations and at least
potentially facilitate anti-social activities, Sankar said."They threaten the financial sovereignty of a country and make it susceptible to
strategic manipulation by private corporates creating these currencies or governments that control them...We have examined the arguments
proffered by those advocating that cryptocurrencies should be regulated and found that none of them stand up to basic scrutiny," he said.The
senior RBI official further said global advertisements with themes such as 'fortune favours the brave' is reflected somewhat in our very own
'lag ja re...kuch to badlega'."It would serve us well if the understanding about cryptocurrencies goes beyond the hype and gets rooted in
reason and pragmatism," he added.Sankar also dismissed as superficial the argument that cryptocurrencies should not be banned because a ban
is unlikely to be effective.One might as well argue that drug trafficking is a rampant phenomenon despite a ban, and therefore drug
trafficking should be legalised and regulated, he remarked.If cryptocurrencies are banned, the vast majority of investors who are law
abiding would desist from investing
Those few elements who would continue to invest will essentially be carrying out an illegal activity
Such exceptions should reinforce the need for a ban, rather than invalidate it, he said.
