Shaktikanta Das burns cryptocurrency investors: Crypto as bad as Tulip bubble? No, even worse

In a major burn moment for cryptocurrency investors, Reserve Bank of India Governor Shaktikanta Das took a dig implying that crypto asset investments are even worse than the Tulip bubble. Investors investing in crypto should keep in mind that the money they are investing is at their own risk and these cryptocurrencies do not have an underlying, not even a tulip, the RBI governor said, ostensibly referring to tulipmania of 17th century when prices of tulip bulbs soared higher than annual income of skilled workers at the time. Critics have often compared crypto to the Tulip bubble; Shaktikanta Das’ comment pits it as even worse.

The governor once again voiced his concerns with private cryptocurrencies and said it is his duty to warn investors. Private cryptocurrencies are a threat to macroeconomic and financial stability and can undermine RBI’s ability to deal with issues of financial stability, he said in a press conference after the central bank’s announcement of monetary policy.

RBI Governor’s remarks on the highly volatile crypto assets comes days after Finance minister Nirmala Sitharaman announced a 30% tax on transfer on virtual digital currencies such as crypto. Finance Secretary TV Somanathan acknowledged that crypto assets come under a grey area though it is not illegal to buy or sell crypto assets.

In the Budget, the government had also announced the launch of digital rupee this fiscal year. Deputy Governor T Rabi Shankar said RBI has been working on central bank digital currencies (CBDCs) from the last one-and-a-half to two years now and the central bank will launch digital rupee this year as announced in Budget.

RBI governor, however, said that rollout of central bank digital currencies (CBDCs) will be careful and cautious and will be done in a careful and cautious manner considering all the risks associated such as cyber security.