RBI Monetary Policy | Governor Das’ tulip warning on crypto has a message for government

moneycontrol.com:

Cryptocurrency is a threat to India’s macroeconomic stability and investors betting on it are doing it at their own risk, RBI Governor Shaktikanta Das said on February 10 in perhaps his starkest warning on crypto that is gaining popularity in the country.

Speaking to the media after sharing the monetary policy committee outcome, Das said, “As far as cryptocurrencies are concerned, the RBI stance is very clear. Private cryptocurrencies are a big threat to our financial and macroeconomic stability." "They will undermine RBI's ability to deal with issues related to financial stability.”

This is the first statement coming from the country’s top banker after the government acknowledged the existence of cryptocurrency by making it a taxable asset in the Union Budget 2022.

Investors be warned

Das cautioned crypto investors and said there was immense risk involved.

“I think it is my duty to tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk. They should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip,” Das said. The growing popularity of cryptocurrencies is often equated with the Tulip Mania that gripped parts of Europe, especially Holland, in the 17th century, which ended in a spectacular crash.

Das’ repeated assertions that cryptocurrencies are a threat to macroeconomic stability is a signal that the North Block should be careful while letting the crypto lobby loose.

Despite RBI’s repeated warning, investors continue to put money in crypto assets. The government's move to tax digital assets is being projected as legal recognition by the crypto lobby to lure investors.

Tax alone won’t cut it

Das has given a clear