Cryptocurrency Has No Inherent Value, Not Even Tulips, Warns RBI Governor

In a post-monetary policy press conference, RBI Governor Shaktikanta Das said that private cryptocurrencies are a threat to macroeconomic and financial stability and investors, who are investing at their own risk, should take the risks into account.

“Private cryptocurrencies or whatever you call it, are a threat to our macroeconomic stability and financial stability. They will undermine the ability of the RBI to deal with issues of financial stability and macroeconomic stability.”

Cautioning investors, the governor said such properties have no inherent value, “not even tulips”.

Earlier, a 30% tax on virtual digital assets like Bitcoin and Ethereum was proposed in the Union Budget.

Further, the buyer shall be liable to withhold tax at the rate of 1% as withholding tax on payments made for the purchase of such property. Also, profit or loss on sale of virtual assets will not be allowed as set off against any other profit or loss. That is, it will be treated as a separate class of property.

Presenting the budget, Sitharaman has also said that the RBI will launch its own digital currency or digital asset of cryptocurrency.

Industry estimates that there are 15 million to 20 million crypto investors in India, with total crypto holdings of approximately 40,000 crore ($5.37 billion). There is no official data available on the size of the Indian crypto market.

According to an October report by Chainalysis, an industry research firm, the crypto market in India grew by 641% as of June 2021.

Earlier, during the day, the central bank left the benchmark interest rate or repo rate – the rate at which banks borrow from the central bank – unchanged at 4% for the tenth time in a row and decided to continue with the accommodative stance. Is.

However, in a surprise move, the RBI has also not tinkered with the reverse repo rate, a move that was widely believed by commentators and analysts as the time for policy normalization amid inflationary concerns.

The RBI has adopted an ultra-lax monetary policy in the wake of the coronavirus pandemic and to shore up the economy with enough liquidity, it has slashed the key rate last to a record low of 4% and this has been the case since May. held at that level. 2020.

The Governor has projected India’s economic growth rate to be 7.8% for the financial year 2023 (FY23). The growth rate for the current financial year remains intact at 9.2%.