Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said on Monday that Cryptocurrencies are akin to Ponzi schemes or even worse and banning these is the most sensible option for India. There are strong reasons to keep cryptocurrencies away from the formal financial system, he said.
“Cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; they are akin to Ponzi Schemes, and may even be worse,” Sankar said while addressing an event organized by the Indian Banks Association.
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from new investors. It has little or no legitimate earnings.
“Cryptocurrencies 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. All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India,” the RBI Deputy Governor added.
‘Treat cryptocurrencies with caution’
Sankar further stated that crypto-technology is underpinned by a philosophy to evade Government controls. They have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution.”
“They undermine financial integrity, especially the KYC regime and AML/CFT regulations, and at…
