Reserve Bank of India: Crypto Doesn\'t Have Intrinsic Value - A Clear and Present Danger?
The Reserve Bank of India (RBI) has consistently voiced strong concerns regarding cryptocurrencies, particularly their lack of intrinsic value and the potential threats they pose to India\'s financial stability. The central bank\'s stance is clear: cryptocurrencies are risky assets with no underlying economic basis.
RBI\'s Stance: Crypto a Threat to Financial Stability
According to the Reserve Bank of India governor, "Private crypto assets or virtual digital currencies are a major threat to macroeconomic and financial stability of a country." This isn\'t merely a suggestion; it\'s a firm warning about the systemic risks associated with widespread cryptocurrency adoption. The RBI has cautioned that cryptocurrencies endanger developing nations’ capital account control gains, resulting in financial instability.
Cryptocurrencies: Ponzi Schemes or Worse?
The RBI\'s view is even more stark. Cryptocurrencies are likened to "Ponzi schemes or worse," and "banning them is the most sensible option for India to avoid the threat they pose to financial" stability. This strong language highlights the central bank\'s deep skepticism about the long-term viability and safety of these digital assets.
RBI Executive Director: Cryptocurrencies Are Not Currencies
During a panel discussion organized by IIM-Kozhikode, P. Vasudevan, an executive director at the RBI, emphasized, "Cryptocurrencies cannot be considered currencies." This statement underscores the fundamental difference between government-backed fiat currencies and decentralized crypto assets. On Thursday, Reserve Bank Governor Shaktikanta Das described cryptocurrencies as a “clear danger” and said that anything that derives value based on make believe is questionable. The RBI believes that genuine currencies are backed by the issuing authority and the economic activity of the nation.
The Question of Underlying Value
Cryptocurrencies have been a topic of intense debate, with their underlying value and potential risks being extensively discussed. In a recent panel discussion organized by IIM-Kozhikode, experts explored the lack of inherent value in many cryptocurrencies. The RBI argues that the value of cryptocurrencies is purely speculative, driven by market sentiment and hype, rather than any tangible asset or economic utility.
Banks\' Exposure to Crypto: A Concern?
While banks\' direct exposure to crypto assets remains relatively low, the RBI is vigilant. As per the Basel III Monitoring Report (September 2025), based on a survey finding, banks’ exposure to crypto assets was 0.14 per cent of the claims on them. The potential for indirect exposure and the broader impact on the financial system remain key areas of concern for the central bank. "Cryptocurrencies are not currencies as" they lack the fundamental characteristics of money.
Conclusion: RBI\'s Cautious Approach
The Reserve Bank of India\'s consistent warnings about the lack of intrinsic value in cryptocurrencies and their potential for financial instability demonstrate a cautious and risk-averse approach. The RBI views the potential downsides of widespread cryptocurrency adoption as outweighing any perceived benefits, advocating for a regulatory framework that protects the Indian economy from the risks associated with these digital assets.