The latest remarks by Reserve Bank of India Governor Shaktikanta Das regarding crypto assets have sparked debate among economists and pundits. During the BFSI Insight Summit 2022 organized by Business Standard, Das said that the next financial crisis will be caused by private cryptocurrencies. The RBI chief has regularly criticized the digital asset class.
During the meeting, when he reiterated that cryptocurrencies have no underlying value and pose a great risk to the macroeconomic and financial stability, he emphasized that private cryptos will be banned.
Market players have different opinions on this. Some think that cryptos, now, cannot cause any financial problems, but, in the future, they can. To eliminate the threat, clear and strict regulations should be put in place. Mohammed Roshan, founder, and CEO of GoSats, said the financial crisis is as long-lasting as the financial and financial system. It might be hard to blame the cryptos. “However, this is possible over time, but it can be avoided or its impact reduced if there are adequate regulations that can protect investors and the economy,” he added.
This has been a transformative year for crypto assets, as it has wiped out a total wealth of over $2 trillion in its market capitalization. The feeling of investors, which is hurt by the fear of inflation and recession, has been hurt again by the failure of projects like LUNA and exchanges like FTX, Three Arrows, Celcius, Vauld.
Financial crisis
Any financial crisis can affect the crypto market like other financial markets, but the token market cannot be a standard currency at this time, but in the future, it may. Edul Patel, CEO, and co-researcher of Mudrex, said that cryptocurrencies alone are unlikely to cause financial problems as the environment is still in its infancy compared to other financial markets.
A financial crisis occurs when there is a systemic failure in the current financial system, caused by many factors generally beyond our control. Mudex’s Patel said political and economic uncertainty, excessive borrowing and lending, and natural disasters have led to the financial crisis in history.
- There are only 153 top cryptocurrencies that are traded on multiple exchanges.
- In contrast, there are 5,886 cryptos with low margins that are traded on a small number of exchanges, as compiled by BitStacker.
It is sad to see a statement like that which separates all cryptos without any value when we have seen how countries and companies accept an asset like Bitcoin as a high-value store, said Roshan.
Patel said that cryptocurrencies create value, depending on the purpose they are designed for. Many other cryptocurrencies also have multiple uses, which can contribute to their value. “For example, the Ethereum and blockchain allows developers to build decentralized applications that support decentralized money, and the native cryptocurrency, Ether, benefits from this use case,” he added.
