Private Cryptocurrencies will spark next financial crisis, RBI governor warns

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Reserve Bank of India (RBI) Governor Shaktikanta Das has warned that the next financial crisis could be caused by private cryptocurrencies. Das made the statement at the BFSI Insight Summit 2022, where he emphasized that cryptocurrencies have no underlying value and pose risks to macroeconomic and financial stability. Das has long held the view that private cryptocurrencies should be prohibited and has supported the RBI’s recent launch of its own cryptocurrency, the Digital Rupee, which is backed by the central bank.

RBI Deputy Governor T Rabi Sankar has also raised concerns about the lack of reliable data on cryptocurrencies, calling for the development of “sufficient, trustworthy, and consistent information” in order to effectively regulate them. Sankar has emphasized the need for a clear understanding of what cryptocurrencies are and what they are intended to do, as well as the importance of a single, consistent communication approach for their regulation.

A new study has found that almost 90% of cryptocurrencies have low trading volume, with only 2% having healthy liquidity. The study, conducted by BitStacker, identified 153 crypto coins with high volume that are traded on many exchanges, while there are 5,886 cryptocurrencies with very low volume that are traded on a small number of exchanges. The report comes as major crypto exchanges like FTX have gone bankrupt due to high volatility.