"Cryptocurrencies Are Even Worse Than Ponzi Schemes": RBI Deputy Governor
If cryptocurrencies are banned, investors who are law abiding would desist from investing.
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 even be worse. 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
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