The next financial crisis will be caused by private cryptocurrencies, if these assets are allowed to grow, the head of India’s central bank warned on Wednesday.
“Cryptocurrencies have… huge inherent risks for our macroeconomic and financial stability,” Shaktikanta Das, governor of the Reserve Bank of India, said at an event. He pointed to the recent collapse of FTX as an example.
Das said his main concern is that cryptocurrencies don’t have any underlying value, calling them “speculative” and adding that he thinks they should be banned.
“It [private cryptocurrency trade] is a hundred percent speculative activity, and I would still hold the view that it should be prohibited … because, if it is allowed to grow, if you try to regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies,” Das said.
Private cryptocurrencies refer to digital coins such as bitcoin.
Das’ comments come as the central bank pushes to introduce its own digital version of the Indian rupee. The Reserve Bank of India began a pilot program for the digital rupee on Dec. 1 for retail use in select cities. Certain users are able to transact using the digital rupee via apps and mobile wallets.
The digital rupee is a type of central bank digital currency (CBDC). Many central banks around the world are looking into issuing digital versions of their own currency.