Cryptocurrency is not money, its value is ‘purely speculative’: RBI Deputy Governor
: RBI Deputy Governor
In a bold statement that has sparked debates across the crypto community, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar declared that cryptocurrency is not money and its value is purely speculative. Delivered at the Mint Annual BFSI Conclave 2025 in Mumbai on December 12, these remarks underscore the ongoing tension between traditional finance and the burgeoning world of digital assets.
Sankar didn’t mince words, calling cryptocurrency “just a piece of code” with no intrinsic value or backing. For investors, regulators, and blockchain enthusiasts in India—one of the world’s largest crypto markets—this perspective from a top RBI official carries significant weight. But is crypto really just digital tulips, or is there more to the story? Let’s dive deeper into his arguments, the revolutionary tech behind it, and what this means for the future of money in India.
The Origins of Cryptocurrency: A Decades-Long Quest
Sankar traced the roots of cryptocurrency back to the 1950s or even earlier, describing its evolution as the culmination of decades of innovation. The birth of Bitcoin in 2009 wasn’t a random event but the result of persistent efforts to create a digital form of value transfer.
At its core, Bitcoin showcased something groundbreaking: blockchain technology. This decentralized ledger allows a digital token to move between strangers without banks or intermediaries. “This technology was revolutionary,” Sankar emphasized. “It can have many uses beyond just Bitcoin.”
Think about it—before blockchain, trusting unknown parties online required a middleman like Visa or PayPal. Blockchain flips the script with cryptography, consensus mechanisms, and immutable records. Today, it’s powering everything from supply chain tracking to NFTs and DeFi platforms.
Why Cryptocurrency Fails the ‘Money’ Test
While praising blockchain, Sankar drew a sharp line: Bitcoin itself is merely a demonstration tool, not money. To understand why, let’s break down the three core functions of money:
- Medium of exchange: Accepted widely for goods and services? Crypto is gaining ground but volatile prices hinder everyday use.
- Store of value: Holds worth over time? Bitcoin’s wild swings say no.
- Unit of account: Stable measure for pricing? Speculative bubbles make this unreliable.
Sankar argued that crypto lacks intrinsic value—no physical backing like gold or government promise like fiat currencies. There’s no issuer guaranteeing repayment, no underlying cash flows like stocks or bonds. “The price of Bitcoin today does not represent value in the same way money has value,” he said. Instead, it’s purely speculative, akin to the infamous Tulip Mania of the 1630s, where bulb prices soared to absurdity before crashing.
“Cryptocurrencies have no intrinsic value; they are not backed by any promise to pay… Since they do not have the basic attributes of money, they are not money. Since they do not have any underlying cash flows, they are not financial assets as well.”
This isn’t just semantics. In India, where RBI has historically been crypto-skeptical—banning banks from dealing with them in 2018 (later overturned)—such views influence policy.
Blockchain vs. Cryptocurrency: The Good, the Bad, and the Revolutionary
Here’s the nuance Sankar highlighted: blockchain is revolutionary; cryptocurrency is speculative. Blockchain’s potential is undeniable:
| Blockchain Applications | Real-World Impact |
|---|---|
| Cross-border payments | Faster, cheaper remittances for India’s 18 million NRIs |
| Supply chain transparency | Tracking spices or pharma from farm to table |
| Digital identity | Secure KYC without data breaches |
| Tokenized assets | Real estate fractions on-chain |
India is already experimenting. The RBI’s digital rupee (e-Rupee) pilot uses blockchain-inspired tech for CBDCs, proving centralized versions can work without speculation.
India’s Crypto Landscape: Regulation on the Horizon?
With over 100 million crypto users, India generates billions in trading volume despite a 30% tax on gains and 1% TDS. Sankar’s comments echo RBI Governor Shaktikanta Das’s warnings about financial stability risks—money laundering, terror financing, and energy-guzzling mining.
Yet, the government is treading carefully. A crypto bill has been in discussion since 2021, balancing innovation with caution. Post-Sankar’s speech, expect:
- Stricter PMLA compliance for exchanges.
- Push for CBDCs over private cryptos.
- Global coordination via FATF.
For investors, this means diversify: Treat crypto as high-risk speculation, not a portfolio staple like gold or equities.
Counterpoints: Is Speculation All Bad?
Sankar’s tulip analogy is apt historically, but crypto has unique traits:
- Fixed supply: Bitcoin’s 21 million cap mimics scarcity.
- Network effects: Adoption by Tesla, El Salvador boosts utility.
- Innovation driver: Speculation funds DeFi, Web3 growth.
Early internet stocks were speculative too—Amazon traded at nosebleed valuations in 2000. Today? Trillions in value. Crypto could mature similarly, especially with layer-2 scaling and ETFs.
What This Means for You: Practical Takeaways
If you’re holding BTC or ETH:
- Risk management: Limit to 5-10% of portfolio.
- Tax compliance: Report gains accurately.
- Explore utility: Use stablecoins for payments, blockchain for NFTs.
For businesses: Adopt blockchain for efficiency, but hedge crypto exposure.
The Road Ahead: Money’s Digital Future
Sankar’s critique reminds us: Technology alone doesn’t make money. True currencies need trust, stability, and adoption. While cryptocurrency is not money today, blockchain could redefine finance tomorrow.
In India, expect RBI to champion regulated digital rupees while sidelining speculative tokens. Globally, as nations like the US approve Bitcoin ETFs, the debate rages on. Stay informed—crypto’s story is far from over.
Will speculation evolve into value, or burst like tulips? Only time (and regulators) will tell.
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