Reserve Bank of India Deputy Governor Compares Cryptocurrency to a Ponzi Scheme

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India’s central bank deputy governor compared cryptocurrency to a Ponzi scheme and called for a ban on the digital asset in the country.

“Cryptocurrencies are very much like a speculative or gambling contract operating like a Ponzi scheme. In fact, it has been argued that the original scheme devised by Charles Ponzi in 1920 is better than cryptocurrencies from a point of view. social view,” the Reserve Bank of India MP said. Governor Shri Rabi Sankar, who delivered a speech to the Indian Banks Association earlier this week.

Expressing concern over the hype surrounding cryptocurrency in India, Sankar said a ban would be more effective in protecting Indians than any attempt to regulate the digital asset.

Sankar’s criticism of cryptocurrency stands in stark contrast to the Indian government’s public stance on the technology, which effectively declared its intention to legalize cryptocurrency through new regulations fifteen years ago. days.

The statement was made by Indian Finance Minister Nirmala Sitharaman, who unveiled in her annual budget speech that the presiding government plans to introduce a cryptocurrency tax in the next fiscal year.

Although Sankar did not refer to Sitharaman’s cryptocurrency tax proposal, he said that any attempt by financial regulators to regulate cryptocurrency would be difficult due to the “lack of [an] audit trail” and the international nature of crypto transactions.

“As it is not always possible to know who manages cryptocurrencies (e.g. bitcoin), to whom would regulatory action be directed? If for some reason the whole of the system collapses, what possible regulatory remedies are there for investors are questions with very uncomfortable implications that do not have satisfactory solutions,” Sankar said.

“All of these factors lead to the conclusion that banning cryptocurrency is perhaps the most sensible choice open to India.”

Sankar added that he believes a cryptocurrency ban would not stifle innovation around distributed ledgers, providing an analogy to human cloning.

“To say that banning cryptocurrencies would retard the uptake of blockchain technology is therefore the same as saying that banning human cloning would kill innovations in biotechnology or that banning nuclear weapons would harm nuclear physics by as a discipline,” he said.

Elsewhere in India, federal income tax authorities reportedly raided several premises of Chinese tech giant Huawei on Tuesday, according to local media.

The searches were reportedly carried out at Huawei’s office premises in New Delhi, Gurugram, Bengaluru, with government officials examining the company’s financial documents, books and records, Indian businesses and overseas transactions of Huawei.

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