RBI Deputy Governor Likens Crypto to a Ponzi Scheme, Proposes Ban

Feb 15, 2022

The deputy governor of India’s central bank said cryptocurrency had no place in his country’s economy and likened them to a Ponzi scheme during the Indian Banks Association 17th Annual Banking Technology Conference.

He stated that crypto was just one use case of blockchain technology and that a ban on digital assets would not affect innovation

“All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India,” said Sankar. 

“We have examined the arguments proffered by those advocating that cryptocurrencies should be regulated and found that none of them stand up to basic scrutiny.”

“Even in case of private authentication through consensus mechanisms, accounts can be kept and rewards can be given in any legal tender currency,” said Sankar. 

 “In other words, creating native cryptocurrencies is just one way of implementing a blockchain; it can be viewed as just one use case of the blockchain technology.”

Sankar said that those arguing that a ban on crypto would limit innovation in blockchain was similar to drawing the conclusion that a ban on nuclear weapons would harm advancements in nuclear physics.

Recently, India’s Finance Minister, Nirmala Sitharaman, moved to introduce a 30% tax on income received from crypto gains, raising hopes for crypto’s legitimacy as an asset class.

Now the question is how crypto would be regulated in India? The minister said she wanted to wait until after inputs from consultation were concluded and that taxing crypto now the government’s “sovereign right.”