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The bitcoin price has dropped back under $17,000 per bitcoin after rocketing above the closely-watched level yesterday. The ethereum price has printed a similar pattern while other major cryptocurrencies are braced for a $65 billion price earthquake.
Now, the governor of India’s central bank has warned the highly-volatile crypto market will cause the world’s next financial crisis if steps aren’t taken to crack down on bitcoin, ethereum and other cryptocurrencies—even as the world’s largest asset manager predicts “the next generation for markets.”
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The bitcoin price has struggled this year, falling sharply and dragging down the price of ethereum … [+]
“Our view is that it should be prohibited because if you try to regulate it and allow it to grow, please mark my words the next financial crisis will come from private cryptocurrencies,” Reserve Bank of India governor Shaktikanta Das said at a conference in comments reported by Coindesk.
In the summer of 2021, China moved to forcefully ban bitcoin, ethereum and other cryptocurrencies, ejecting those who secure crypto blockchains in return for freshly-minted cryptocurrencies—a process known as mining.
However, crypto is hard to ban and China remains the 10th largest country for crypto adoption, according to Chainalysis’ 2022 global crypto adoption index, up from 13th in 2021. India was ranked fourth, behind Vietnam, Philippines and Ukraine.
“[Bitcoin, ethereum and other cryptocurrencies] have no underlying value,” Das said. “They have huge inherent risks for our macroeconomic and financial stability. I am yet to hear any credible argument about what public good or what public purpose it serves.”
The collapse of the bitcoin, ethereum and crypto market over the last year has sparked serious warnings over the future of some of the biggest companies in the industry, while lawmakers and regulators have ramped up their scrutiny of the technology.
Others have also warned bitcoin and crypto could be the source of a major, global financial crisis. Last year, Viktor Shvets, a managing director at Macquarie, told Bloomberg the next financial crisis could originate in the mania for cryptocurrencies while the Bank of England’s deputy governor for financial stability warned that cryptocurrencies could spark a global financial meltdown unless stringent new regulations are introduced.
In October, a commissioner with the U.S. Commodity Futures Trading Commission warned growing interest in crypto by some of Wall Street’s biggest companies will cause “financial stability risk [to] increase and could rise to the level of systemic risk.”
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The bitcoin price has crashed by around 70% over the last year, wiping away trillions of dollars in … [+]
Meanwhile, India is exploring the development of a crypto-inspired, government-backed central bank digital currency (CBDC) known as the e-rupee or digital rupee.
“You will see in days to come more and more central banks will embrace digital currencies and India has been in the forefront of the digital revolution in the current century,” Das said.
Earlier this year, India began taxing cryptocurrency, levying a 30% tax on the gains and a 1% deduction on each crypto transaction, prompting Binance chief executive Changpeng “CZ” Zhao to brand the country an unfriendly environment in an interview with TechCrunch last month.
Over the summer, Das said he was “happy” he’d warned people not to invest in bitcoin or cryptocurrencies, saying he was “anecdotally” aware that some people pulled out of crypto “thanks to the caution and the concern that emanated out of the Reserve Bank.”
