Cryptocurrency is not money, its value is ‘purely speculative’: RBI Deputy Governor
Cryptocurrency is not , its value is ‘’: RBI Deputy Governor
In a bold statement that has sparked debates across the crypto community, the Reserve Bank of India’s (RBI) Deputy Governor T Rabi Sankar declared that cryptocurrency is not money and its value is entirely purely speculative. Delivered at the Mint Annual BFSI Conclave 2025 in Mumbai on December 12, these remarks underscore the RBI’s longstanding skepticism toward digital assets like Bitcoin.
Breaking Down the Deputy Governor’s Key Arguments
Sankar didn’t mince words, labeling cryptocurrency as “just a piece of code.” He traced its roots back decades, possibly to the 1950s, positioning Bitcoin as the culmination of a long quest for decentralized digital money. But while he praised the underlying blockchain technology as revolutionary, he drew a sharp line between the tech and the tokens it powers.
“The Bitcoin, or rather the Blockchain technology that underlined the Bitcoin, demonstrated that a digital token can be transferred between unknown counterparts without a need for an intermediary. This technology was revolutionary. It can have many uses… While the technology itself was revolutionary, Bitcoin was just a tool to demonstrate the technology.”
At its core, Sankar argued, Bitcoin lacks intrinsic value or any “promise to pay.” Unlike fiat currencies backed by governments or assets with cash flows like stocks, crypto prices mimic the infamous tulip mania of the 17th century—a classic bubble driven by hype rather than fundamentals.
- No intrinsic value: Crypto isn’t tied to real-world utility or commodities.
- No issuer or backing: There’s no central authority guaranteeing redemption.
- Lacks money’s attributes: It struggles as a medium of exchange, store of value, or unit of account.
- Not a financial asset: No underlying cash flows to justify valuations.
Why Blockchain Shines, But Crypto Falls Short
Here’s where Sankar’s critique gets nuanced. Blockchain technology is a game-changer. It enables secure, transparent peer-to-peer transactions without banks or middlemen. Think supply chain tracking, digital identities, or even voting systems—blockchain’s potential extends far beyond finance.
Bitcoin, however, was merely a proof-of-concept. Its volatility, scalability issues, and energy-intensive proof-of-work mining make it impractical for everyday use. In India, where RBI has prioritized financial stability, this distinction is crucial. The central bank has repeatedly warned against crypto’s risks, from money laundering to investor losses.
India’s Rocky Road with Cryptocurrency Regulation
The RBI’s stance isn’t new. In 2018, it imposed a banking ban on crypto exchanges, citing systemic risks. Though the Supreme Court lifted it in 2020, the bank remains cautious. India now taxes crypto gains at 30% plus a 1% TDS on transfers, treating them as virtual digital assets (VDAs)—not currency.
Sankar’s comments come amid global shifts. The U.S. eyes Bitcoin ETFs, El Salvador adopts it as legal tender, and the EU rolls out MiCA regulations. In contrast, India’s approach emphasizes rupee sovereignty and protecting 1.4 billion citizens from speculative bubbles.
| Aspect | Fiat Money (e.g., INR) | Cryptocurrency (e.g., Bitcoin) |
|---|---|---|
| Backing | Government trust & reserves | Network consensus |
| Value Source | Legal tender laws + economy | Speculation & demand |
| Volatility | Low | Extreme |
| Regulation | Central bank controlled | Decentralized & evolving |
The Tulip Mania Parallel: A Warning from History
Sankar’s tulip comparison isn’t hyperbole. In 1637, Dutch tulip bulbs traded at insane premiums before crashing 99%. Crypto’s boom-bust cycles—Bitcoin’s 2021 peak at $69,000 followed by a 75% drop—echo this. Without productive use or issuer backing, prices rely on greater fool theory: buying in hopes someone pays more later.
Yet, crypto advocates counter that speculation drives innovation. Network effects create value, much like social media platforms. Stablecoins and DeFi aim to fix usability, but regulators like RBI see red flags in illicit finance and environmental costs.
Implications for Indian Crypto Investors and the Global Market
For India’s 20+ million crypto users, this signals caution. With platforms like WazirX and CoinDCX thriving despite hurdles, Sankar’s words reinforce the need for due diligence. Diversify, understand risks, and treat crypto as high-risk speculation, not savings.
Globally, RBI’s view aligns with critics like JPMorgan’s Jamie Dimon. But as central bank digital currencies (CBDCs) like India’s e-Rupee advance, blockchain could integrate without private crypto’s pitfalls.
Looking Ahead: Regulation, Innovation, and Balance
While Sankar dismisses crypto as non-money, his praise for blockchain opens doors. India could lead in regulated DLT applications—remittances, which cost $25 billion annually, or farmer credit via transparent ledgers.
The debate rages: Is crypto a revolutionary asset class or a digital tulip? RBI says the latter, urging focus on proven money. As markets evolve, investors must weigh speculation against stability.
Stay tuned for more on India’s crypto landscape and blockchain breakthroughs.
FAQs: Cryptocurrency and RBI’s View
Is cryptocurrency legal in India?
Yes, but heavily taxed and unregulated as currency.
What makes blockchain revolutionary?
Decentralized, secure data sharing without intermediaries.
Why is Bitcoin’s value speculative?
No intrinsic use, driven by trader sentiment.
