The Governor of the Reserve Bank of India said that all private cryptocurrencies have no underlying value. He also compared cryptocurrency with tulips, adding that even tulips were worth more when the Dutch so-called tulip mania was booming in the mid-1600s.
The Dutch tulip bulb market bubble originated in Holland in the 17th century when speculation and greed pushed the price of tulip bulbs to extreme levels. Since then, tulip mania has been one of the market bubbles discussed, showing how far speculation prices can go.
Following the results of monetary policy, Shaktikanta Das said at a press conference that investors should be aware that cryptocurrency poses a huge threat to macroeconomic and financial stability.
At Thursday's monetary policy meeting, the Bank of India surprised people by keeping its rate unchanged at 4%.
Das's comments appeared just a week after Indian Finance Minister Nirmala Sitharaman announced a 30% tax on income from cryptocurrencies and other digital assets.
Reuters estimates that there are up to 20 million crypto investors in India with total assets of around $5.37 billion.
But despite serious concerns about the crypto space, India insists on developing CBDC – the central bank's own digital currency.
The country took some concrete steps last week to implement CBDC, with Finance Minister Sitharaman saying that the digital currency will be introduced in the next fiscal year, which starts on April 1st.
This step was taken after India's central bank expressed dissatisfaction with private cryptocurrencies, citing problems with financial stability.
