It has been a short time since Terra Luna and TerraUSD collapsed. Now the Reserve Bank of India is cautioning citizens against investing in crypto to avoid similar losses. Shaktikanta Das, RBI’s governor, recently had an interview where he discussed the decline of cryptocurrency. He also stated that there should be more regulations in the market.
RBI has warned citizens about the dangers of investing in cryptocurrency
The governor highlighted how the RBI had issued multiple warnings about cryptocurrency. Their signs seemed to have paid off as Terra Luna, one of the leading cryptocurrencies, crashed. He adds that citizens might have questioned regulations if the RBI has chosen to place them.
The decline of cryptocurrency has surprised many as the industry has experienced a steady rise since 2019. It has lost $1 trillion since the year began and $500 million since May. One of the factors that led to the collapse was the decline of Luna and the Terra USD stablecoin, which altered market conditions.
How adapting crypto could affect India’s economy
Das adds that cryptocurrency has no underlying value. Moreover, it is difficult to determine how to regulate the industry. Das states that the RBI will remain firm that allowing crypto could destabilise India’s macroeconomics, financial, and monetary stability.
One of the things that the RBI had warned about was that the digital currency could cause India’s dollarisation. Das believes that the Indian government holds similar opinions. Furthermore, the central bank has stated that it would discuss the issue and relay its final decision to the government.
Das was also asked about a statement that Coinbase’s CEO Brian Armstrong made. Armstrong had claimed that RBI informally pressured Coinbase India into disabling payments from the Unified Payment Interface shortly before it was set to launch.
When asked about this, Das stated that he wouldn’t respond to hypothetical remarks made by Armstrong.
Ministry of Finance officials, the World Bank and the International Monetary Fund are now discussing how best to legislate cryptocurrency. The Minister of Finance in India, Nirmala Sitharaman, has said that the country isn’t in a hurry to decide on cryptocurrency legislation.
