Reserve Bank governor Shaktikanta Das on Friday reiterated his call for an outright ban on cryptocurrencies, saying these are “nothing but gambling” and their perceived “value is nothing but make-believe.''
To further its opposition to such currencies and also to take a lead over other central banks, the RBI recently launched its own digital currency (central bank digital currency), in the form of e–rupee on a pilot mode, first for the wholesale in late last October and a month later for retail customers.
Speaking at a Business Today event this evening here, Das reiterated the need for an outright ban on cryptos saying though those supporting it call it an asset or a financial product, there is no underlying value in it not even a tulip (alluding to the Dutch tulip mania blow-up in the early part of the past century).
“Every asset, every financial product has to have some underlying (value) but in the case of crypto there is no underlying… not even a tulip…and the increase in the market price of cryptos, is based on make-believe. So anything without any underlying, whose value is dependent entirely on make-believe, is nothing but 100 per cent speculation or to put it very bluntly, it is gambling,” the governor said.
“Since we don't allow gambling in our country, and if you want to allow gambling, treat it as gambling and lay down the rules for gambling. But crypto is not a financial product,” Das asserted.
Warning that legalizing cryptos will lead to more dollarization of the economy, he said cryptos masquerading as a financial product or financial asset, is a completely misplaced argument.
Explaining it, he said the bigger macro reason for banning them is that cryptos have the potential to and the characteristics of becoming a means of exchange; an exchange of doing a transaction.
Since most cryptos are dollar-denominated, and if you allow it to grow, assume a situation where say 20 per cent of transactions in an economy are taking place through cryptos issued by private companies.
Central banks will lose control over that 20 per cent of the money supply in the economy and their ability to decide on monetary policy and to decide on liquidity levels. Central banks' authority to that extent will get undermined, it will lead to a dollarization of the economy.
“Please believe me, these are not empty alarm signals. One year ago in the Reserve Bank, we had said this whole thing is likely to collapse sooner than later. And if you see the developments over the last year, climaxing in the FTX episode, I think I don't need to add anything more,” Das said.
To a question whether he sees any threat to the safety and security of banking from the increased digitization of payments, Das said banks have to ensure that they are not swallowed by big tech which today control most digital transactions.
“Issues of data privacy and issues of robustness of the tech infrastructure of banks have to be the focus of banks. Since many banks are actively engaged with many big tech, their challenge is to ensure that this should not lead to a situation where banks are swallowed up by the big tech. Banks should take their own decisions and not to be allowed to be dominated by big tech,” Das said.
On the CBDC being piloted now, he said central banks issued digital currencies are the future of money and its adoption can help save on logistic and printing costs.
“I think CBDC is the future of money,” the governor said, adding “since lots of central banks are doing/working on it and we cannot be left behind but at the same time we have to ensure that its technology is robust and very safe and ensure that it's not cloned or counterfeited.”
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New Delhi (PTI): The Congress on Friday said it has received fresh notices from the income-tax department, asking it to pay Rs 1,823.08 crore, and alleged that the BJP is in "serious violation" of income-tax laws for which authorities should raise a demand of more than Rs 4,600 crore from the saffron party.
The Congress also accused the ruling BJP of indulging in "tax terrorism" to financially cripple the opposition party ahead of the Lok Sabha polls.
Addressing a press conference at the AICC headquarters here along with Congress general secretary Jairam Ramesh, party treasurer Ajay Maken alleged that the BJP is in serious violation of income-tax laws and said the I-T department should raise a demand of Rs 4,617.58 crore from the saffron party for such violations.
Maken said political parties have to fill up a proforma of Form 24A, in which two basic and important pieces of information have to be furnished -- the names and addresses of their donors.
"We have analysed all the submissions of the BJP to the Election Commission (EC). The party has faltered every year," Maken claimed.
Ramesh alleged that through the "electoral bonds scam", the Bharatiya Janata Party (BJP) has collected Rs 8,200 crore and used the route of "pre-paid, post-paid, post-raid bribes and shell companies".
On the other hand, the BJP is engaged in "tax terrorism", he alleged.
"Efforts are being made to financially cripple the Congress, but we are not going to be cowed down," Ramesh said.
He asserted that the Congress's campaign for the upcoming parliamentary polls will continue and the party will take its guarantees to the people of the country.
"We will not be scared of these notices. We will be more aggressive and fight these polls," the former Union minister said.
Maken alleged that the Congress and other like-minded opposition parties are being selectively targeted by the I-T department, which he described as the BJP's "frontal organisation".
He said the Supreme Court will soon hear the Congress's plea on the I-T department's demands from it.
"An illegal attempt to freeze the bank accounts of the principal opposition party in February has gone on for more than a month on the eve of the general election," Maken said.
Before the dust could settle on that unprecedented "vindictive" action, in a patently "illegal and undemocratic" move, the "frontal organisation of the BJP" has launched its next "premeditated" and "diabolical" campaign against the Congress, he added.
The income-tax returns filed by the Congress for eight years have been reopened on "baseless and manufactured" grounds to levy illegal I-T demand orders totalling thousands of crores of rupees, Maken said.
The timing of the I-T department's action -- in February and March, days before and even days after the Lok Sabha polls were announced on March 16 -- speaks for itself about the mala-fide nature of these actions, the Congress leader said.
Maken alleged that the "BJP-ruled I-T department" has so far forcibly taken out Rs 135 crore from the Congress's bank accounts due to an alleged Rs 14 lakh non-compliance demand against the party.
"This amount was recovered by freezing more than Rs 270 crore of the Congress's bank balance across several accounts," he said.
During this period of several weeks, the bank accounts of the Congress were effectively "frozen" in an illegal attempt to paralyse the party's functioning during the Rahul Gandhi-led Bharat Jodo Nyay Yatra, Maken alleged.
"This action was designed to choke the Congress financially and prevent, stop, delay and disable any election-related expenditure by the party on advertisements, travel, salaries, agencies etc.
"It is indeed appalling that the financial years assessed go back to 1993-94, when the late Sitaram Kesri was the party's treasurer. Out of the eight years, the I-T demand orders for four years have been issued by the BJP's frontal organisation even without assessment orders. This is unprecedented in the history of taxation in India," he said.
"These orders are based on manufactured and planted diaries and so-called raids by the BJP's frontal organisation on third parties. Several of these raided third parties enjoy stay orders from courts based on vitiated search procedures by the I-T department," Maken claimed, adding that the same interim relief is not being granted to the Congress.
In the history of India, why is the Congress, a tax-exempt political party like others, being "forced" to pay income tax during the 2024 Lok Sabha election, he asked.
"Why have the BJP or its alliance partners not been dealt with similarly? Why has the I-T department not taken cognisance of the Yediyurappa diaries, Jain diaries, Sahara diaries, Birla diaries, Bangaru Lakshman convictions and penalised the BJP?" he asked.
"Why is the EC -- the guarantor of free-and-fair elections -- a mute spectator? Is this not an obvious, brazen, blatant and shameful attempt by the BJP to illegally financially cripple the opposition? Where is the level-playing field in Indian elections? Can 2024 be called a free-and-fair election anymore?" Maken asked.