Raghuram Rajan, former governor of Reserve Bank of India (RBI), believes that most of the 6,000 cryptocurrencies currently in existence will die.
Rajan stated that only one or two or a very small number of people would survive. He told CNBC-TV18 that if things are worthless because they become more expensive down the road, it’s a bubble. “… Many cryptos are valuable because someone is more fool than they are.
Rajan likened the current fad for cryptocurrencies to the Dutch tulipmania of the 17th Century. He said that cryptocurrencies may be as problematic as unregulated chit fund, which can take money from people and go bankrupt. “A lot of people who hold crypto assets will be aggrieved.”
Rajan said that cryptocurrencies did not have no value and most of them had no permanent value. He also said that some of them could survive to pay, particularly cross-border payments.
He said that crypto was a $2.5 trillion problem in the US and that no one wants to regulate it.
Rajan stated that India must allow the Centre to enable the underlying blockchain technology. He said that blockchain methods of transacting were cheaper, especially when they are used across borders.
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The government will likely present a Bill to the winter session of Parliament. It is scheduled to start on November 29. This Bill would ban all but a few private cryptocurrency and establish a regulatory framework for digital currencies issued by the RBI.
The Lok Sabha’s winter session will include the introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill 2021.
It aims to “create a facilitative environment for the creation and issuing of an official digital currency.” It also seeks to ban all private cryptocurrencies within India. However, it allows certain exceptions to promote cryptocurrency’s underlying technology and its uses,” reads an introduction to the Bill posted on the Lok Sabha website.