Reserve Bank of India Deputy Governor Sparks Crypto Debate, Says Bitcoin Lacks Any Real Worth
- RBI Deputy Governor says Bitcoin has no real economic value.
- Bitcoin criticized as speculative, lacking institutional backing and real worth.
- India’s crypto market grows despite regulatory challenges and skepticism.
The debate surrounding cryptocurrency’s value has intensified after strong remarks from India’s central bank leadership. Reserve Bank of India Deputy Governor T. Rabi Sankar criticized Bitcoin, stating it holds no real economic value and exists primarily due to speculative demand. He emphasized that Bitcoin’s price is determined by what buyers are willing to pay and lacks any institutional backing or guarantees.
Sankar also drew a distinction between Bitcoin and the underlying blockchain technology, which he believes has valuable applications beyond cryptocurrency. He compared Bitcoin’s market behavior to historical speculative bubbles, like tulip mania, where prices rise without intrinsic worth. Furthermore, he argued that Bitcoin does not qualify as a financial asset, as it generates no cash flow or represents ownership in any productive venture. The extreme volatility of Bitcoin and the wider cryptocurrency market, with some assets down by as much as 70%, underscores the risks involved.
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Growing Adoption Challenges the Central Bank Narrative
Despite warnings, cryptocurrency usage in India continues to grow rapidly, with over 100 million users, making it one of the largest crypto markets globally. This growth persists despite strict regulatory scrutiny. Authorities have imposed a 30% tax on crypto gains and a 1% tax deducted at source on all transactions. These measures aim to limit speculation and enhance monitoring. Retail participation remains high, even with these higher costs, as traders are attracted by global market exposure.
Younger investors are particularly interested in digital assets, with international trends influencing local trading behavior. However, concerns about financial stability risks persist, as unchecked crypto growth could expose retail investors to significant losses. Despite these concerns, exchanges and users operate within regulatory boundaries, reflecting a broader debate between innovation and risk. Overall, the Deputy Governor’s remarks highlight skepticism toward Bitcoin’s value, while the growing adoption shows strong public interest in crypto.
Also Read: Itaú Backs Bitcoin as Banks Urge Investors to Hold Crypto Through Volatility
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