RBI Governor Shaktikanta Das Warns Against 'Crypto Mania,' Stresses Risks for Emerging Markets

Addressing a financial sector seminar organized by the business daily Mint in Mumbai, RBI Governor Shaktikanta Das stated on Thursday that emerging markets and the world cannot afford to have a "crypto mania." He emphasized that the central bank does not "emulate" others in terms of regulations and reiterated the bank's and his personal opposition to cryptocurrencies, maintaining this stance even after US regulators allowed Bitcoin Exchange Traded Funds (ETFs).

Das stated, "What is good for another market need not be good for us. Therefore, our views — both that of the Reserve Bank and personally that of mine — remain the same." He also highlighted the risks associated with cryptocurrencies for both emerging market economies and advanced economies, stating that venturing down the path of cryptocurrencies would create substantial and challenging risks in the future.

In response to a query about the developments in the US regarding cryptocurrencies, Das questioned the rationale behind pursuing that path and emphasized that personally and institutionally, he and the RBI oppose private cryptocurrencies due to the significant threat they pose to financial stability.

Referring to the US regulator SEC's approval of bitcoin ETFs, Das stated, "Our position, my position, and the RBI's position on this remain unchanged irrespective of who does what. Just because someone has done something, we are not here to emulate them." He noted that the US regulator, in the same announcement, issued cautionary advice and warnings to investors about the risks associated with cryptocurrencies.

Das likened the potential crypto mania to historical events like the Tulip mania in the Netherlands, cautioning that the world and emerging markets cannot afford a similar outcome. The governor refrained from commenting on the actions of regulators in other countries, emphasizing that they know what is best for their respective nations.

Regarding the forthcoming vote-on-account and its potential inflationary impact, Das expressed his belief, based on the government's past records, that the interim budget will not lead to inflationary pressures. He also mentioned the supply-side measures the government has taken to address rising prices since the beginning of the Russia-Ukraine war.