Former RBI governor Raghuram Rajan on Wednesday stated solely a “handful” of the 6,000-odd cryptocurrencies in existence right now would possibly survive going ahead.
Evaluating the craze in cryptocurrency with that of the tulip mania within the Netherlands within the seventeenth century, Rajan stated individuals maintain cryptocurrencies for 2 causes — retailer of worth and an asset which could recognize; and to be used in funds.
“Do we actually want 6,000 cryptocurrencies to do funds? One or two, could also be a handful, that’s going to outlive for use for funds even when the expertise is so helpful that it’s a substitute for money and forex…
“That will counsel that almost all cryptos are unlikely to outlive with excessive values going ahead,” Rajan informed CNBC-TV18.
The remarks come a day after the federal government listed for introduction in Parliament a invoice to ban all personal cryptocurrencies, with some exceptions.
‘The Cryptocurrency and Regulation of Official Digital Foreign money Invoice, 2021’, to be launched within the winter session of Parliament starting November 29, seeks to “create a facilitative framework for creation of the official digital forex to be issued by the Reserve Financial institution of India.
The invoice additionally seeks to ban all personal cryptocurrencies in India, nevertheless, it permits for sure exceptions to advertise the underlying expertise of cryptocurrency and its makes use of”.
Rajan additional stated cryptos could pose the identical downside as unregulated chit funds which take cash from individuals and go bust.
“If issues have worth solely as a result of they may have extra worth down the road, if that is the one purpose, then that is what we name a bubble,” Rajan identified.
This story has been printed from a wire company feed with out modifications to the textual content. Solely the headline has been modified.
Supply: Live Mint