The Reserve Bank of India (RBI) has been violently contradicting cryptocurrencies such as Bitcoin, asserting that no underlying value supports such assets due to which they are considered to be highly speculative by nature. However, the authorities of India have not yet taken any decision in this respect and seem pretty perplexed. T Rabi Sankar, the Reserve Bank of India’s Governor, stated that the central bank digital currencies (or CBDCs) have the potential to engulf virtual digital assets (VDAs) or private cryptocurrencies.
A Collaboration Expected Between Cryptocurrencies and CBDCs
In advance of the release of a consultation paper (dealing with the respective digital assets) by the country’s government, the central bank kept on condemning the cryptocurrencies. Nonetheless, the opinion of the industry says otherwise and now they stand opposite each other. Sankar, while appearing at a seminar conducted on the behalf of the IMF, mentioned that they consider that the private cryptocurrencies could be killed by the CBDCs.
The crypto assets, taking into account Bitcoin (the primary cryptocurrency), have been strictly criticized by the RBI as the organization is of the view that they do not possess any core value that could support them and thus they become extremely speculative. Nevertheless, no definite stance has been determined by the Indian government up till now regarding this. EasyFi Network’s CEO and Co-Founder, Anshul Dhir, suggests that cooperation would be witnessed between the cryptos and CBDCs rather than a competition.
CBDCs Do Not Threaten “Private” Cryptocurrencies
Giottus’ CEO, Vikram Subburaj, reiterated these words, revealing that cryptocurrencies would not be killed by the CBDCs, as this appears to be included in the wish list of the RBI. He added that they are not turning ears to the numerous innovations that are occurring in the very field. As per him, a payment system – which is based on a blockchain – with autonomous support is improbable to pose competition for cryptocurrencies generally. He moved on to say that Bitcoin, Ethereum as well as the rest of such crypto-assets are open instead of being private.
Formerly this week, the Ministry of Finance’s Department of Economic Affairs had disclosed to shortly issue a consultation paper to cover these types of private cryptocurrencies. Currently, Sankar spoke, when crypto proponents have been struggling a lot for stablecoins (having linkage to the currencies that are regulated) acceptance without any objection appears to be confusing.
He stressed that people should comprehend the distinction between currency and money as well as the private money that is existing in a huge amount within the system. As the market players put it, CBDCs have the potential to be authentic as well as a beneficial substitute for this category of crypto, if their implementation is done well. The challenges undergone by the stablecoins are related to their pegging in some specific currency.
According to him, substantial assistance could be provided by the stablecoins in terms of capital inflows as well as the transfers in the ecosystem of cryptocurrency, and they are just a proportion of the utility represented by blockchain.
