A top official of India’s central bank has compared cryptocurrency to “Ponzi scheme” and suggested an outright ban in its sharpest criticism just weeks after the government proposed taxation of the virtual digital asset and paved way to recognize it as legal tender in the world’s second largest internet market.
T. Rabi Sankar, Deputy Governor of Reserve Bank of India, told audience at a banking conference that cryptocurrencies have been “specifically developed to bypass the regulated financial system,” and is not backed by any underlying cash flow.
“We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi Schemes, and may even be worse,” he said.
Sankar’s remarks come at a time the Indian government has sent signals that it’s moving in the direction of recognizing the digital virtual asset as legal tender. The nation’s Finance Minister Nirmala Sitharaman proposed taxing income accrued from transfer of cryptocurrencies and NFTs in the federal budget early this month.
The sale of cryptocurrencies and NFTs have made quick inroads in India in the past one year despite regulatory uncertainty. The world’s second largest internet market has seen the second-highest adoption rate for cryptocurrency investments, according to an analysis by research firm Chainalysis.
“The magnitude and…
