The Reserve Bank of India states that cryptocurrencies have no intrinsic value, as India is still confused about cryptocurrency regulations. The country has been in talks with central banks and finance ministers for years to set the best and most appropriate framework for the regulation of digital assets.
The Reserve Bank of India sometimes emphasizes the risks of cryptocurrencies. On June 30, the central bank released a financial stability report talking about cryptography. The RBI said cryptocurrencies have been very popular for years, but can’t be considered neither financial nor currency. Banks also said they have no intrinsic value.
RBI warns that cryptocurrencies can lead to dollarization of most assets
The RBI said in a report that cryptocurrencies could devalue their own currencies, leaving the government out of control of its financial situation and ultimately leading to dollarization of assets.
One thing that is clearly clear is that the risk of revolving around cryptography increases as it grows. The more you evolve, the greater the risk. This is because the global adoption of cryptography is attracting attention as an opportunity for fraudsters and hackers.
The RBI warned that cryptocurrencies would jeopardize the interests of capital account management in developing countries, resulting in financial instability.
“Cryptocurrencies are not currencies because they have no issuers, they are not a means of debt or financial assets, and they have no intrinsic value. At the same time, cryptocurrencies pose a risk.”
Reserve Bank of India
The report scrutinized three different sectors of cryptocurrencies: Bitcoin, Stablecoin, DeFi, and trading platforms. Some of the risks associated with cryptocurrencies and regulated financial systems have been identified. These include credit and operational risk, credit discrepancies, concentration risk of crypto trading platforms, and lack of regulatory overview.
The report also highlighted the lack of support for Bitcoin and DeFi. The Reserve Bank of India also stands in line with the view that countries need to formulate urgent regulations on cryptocurrencies following growth.