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RBI still doesn’t want people investing in crypto and warns they could lose money in a market crash

The RBI has been known for its anti-crypto stance in the past and has cautioned investors on several occasions about the risks of crypto investing.

Reserve Bank of India / Image by: Wikimedia Commons

Sun, 28 Aug 2022, 12:26 pm UTC

Reserve Bank of India governor Shaktikanta Das has issued a warning that the crypto market could further crash. Should this happen, the central bank head said that small crypto investors could significantly be affected as they could lose their money.

The RBI has been known for its anti-crypto stance in the past and has cautioned investors on several occasions about the risks of crypto investing. “I’m happy that we sounded those warning signals and I would like to believe that a large number of people would have taken a note of the warning signals and the concerns expressed by the Reserve Bank,” Das said, according to Bitcoin.com.

The RBI Governor added that the central bank’s warnings have successfully deterred would-be investors from taking the plunge. “I would like to believe … that many people did not invest in crypto or sort of pulled out of crypto thanks to the cautions and concerns that emanated out of the Reserve Bank,” Das added.

The central bank head went on to explain the potential risks crypto might introduce into the financial system. “Crypto, you know, we have said it earlier, it can create a lot of financial instability in terms of the ability of the central bank to determine monetary policy,” the RBI governor said. “It will also have an adverse impact on our exchange rate, on capital flows, on banking sector stability.”

He also expressed concerns about crypto’s potential use in criminal activities. Das cautioned that digital currency has the “potential for being used as a tool for money laundering and for illicit transfer of money.”

The RBI governor pointed out crypto’s volatility as a cause for concern. “Something which doesn’t have an underlying, the prices will not remain high all the time so therefore it may crash, and it has crashed, ultimately … it is the small investors who lose money so therefore it is a big risk for the small investors,” he added.

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