Just days after India’s central bank backed a ban on the crypto sector, Raghuram Rajan again nodded to the idea that the underlying technology behind cryptocurrencies needs to be explored. Speaking in Davos at the World Economic Forum (WEF), the former Reserve Bank of India (RBI) governor said that while the crypto sector has faced a deserved scrutiny and decline, the technology driving digital assets like cryptocurrencies has an enticing next-gen fintech tool to experiment with. Rajan, a famous economist, was the 23rd head of the RBI between 2013 and 2016.
“I don’t think you want to shut out this technology and say it failed as a speculative asset. I think it has had its comeuppance. But I think as a technology we haven’t seen its limits yet.” Coindesk report quoted Rajan as saying.
the global crypto industry slipped into a major decline, falling from its trillion-dollar valuation to just under US$800 billion (around Rs.65.20.496 billion) in the second half of 2022.
Promising crypto projects like Terra and FTX suffered from liquidity constraints and broke up dramatically, leaving investors dry. In addition, a plethora of hack attacks deterred much of the remaining investors. Against the backdrop of these circumstances, crypto firms are as established as binance also resorted to announcing staff reductions. A number of companies including Celsius and Traveller also filed for bankruptcy.
The governments of several nations including India are currently working to regulate the digital assets industry and protect it from market turmoil.
According to Rajan, crypto players must refrain from promoting these assets as an “inflation-resistant” alternative to the fiat currencies that already exist. Instead, Rajan said, people need to work on developing the crypto underlay Blockchain Technology.
He has allegedly already clarified that he currently does not see any large-scale applications for the crypto sector.
“The notion that these are stable forms of payment compared to fiat currencies, central bankers cannot be trusted, but this crypto can be trusted, belongs to a small minority of people. So in general I’m saying that there isn’t currently a large-scale use case; there are niche use cases.”
Earlier this week, current RBI Governor Shakktanta Das said that investing in crypto is the same as gambling. “Every asset, every financial product must have an underlying asset (value), but in the case of crypto there is no underlying asset and the increase in the market price of cryptos is based on illusion. So anything without an underlying, whose value is entirely dependent on appearances, is nothing but 100% speculation or, to put it bluntly, it’s “gambling,” Das said while supporting a ban on crypto quoted as said.
India will receive its annual budget for this year in February and guidelines on how to deal with the crypto sector have been awaited for over a year. Currently, crypto trading is allowed and taxed in India.
