Allowing private cryptos to grow can precipitate next financial crisis, warns Das

Such instruments do not have any underlying value and are speculative in nature

Reserve Bank Governor Shaktikanta Das on Wednesday warned that allowing private cryptocurrencies to grow can precipitate the next financial crisis.

Speaking at the ‘BFSI Insight Summit’ organised by Business Standard here, Mr. Das also said the government and the central bank have been working in a coordinated manner to tame inflation and the Centre is ‘equally serious’ about curbing price rise.

On private cryptocurrencies like Bitcoin, Mr. Das reiterated the RBI's demand for a complete ban, saying such instruments do not have any underlying value and are speculative in nature.

"It's a 100 per cent speculative activity, and I would still hold the view that it should be prohibited. If you try to regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies," he said.

"Cryptocurrencies have huge inherent risks from macroeconomic and financial stability (perspective) and we have been pointing it out," he added.

The RBI Governor further said the developments over the last one year, which include the latest crash of cryptocurrency exchange FTX, which has been termed as one of the biggest financial frauds in the history of the U.S., illustrate the threat posed by such instruments.

"After all these, I don't think we need to say anything more about our stand," Mr. Das remarked, adding that private cryptocurrencies' valuation has shrunk from $190 billion to $140 billion and there is no underlying value for the market-determined price.