RBI governor warns against cryptocurrencies, says tulips have more value

The Reserve Bank of India governor Shaktikanta Das gave a stark warning against investing in cryptocurrencies. He said they lacked the underlying value of even a tulip, in an apparent reference to a speculative bubble that overwhelmed Netherlands in the 17th Century, reported Economic Times.

Mr Das gave his assessment of the digital currency euphoria barely a few days after the government established a taxation framework for cryptocurrencies.

Crypto enthusiasts who feared that the government might ban digital currencies took the imposition of a tax as an indication of official acceptance, despite reservations by the central bank, Economic Times reported.

“Private cryptocurrency is a huge threat to macro-economic stability and financial stability...investors should keep this in mind that they are investing at their own risk,” Das spoke at a news conference after the monetary policy meeting.

“These cryptocurrencies have no underlying (value) - not even a tulip,” he warned.

Sometimes referred to as “tulipmania”, the Dutch tulip bulb market bubble in the 1600s, is seen as a symbol of greed.

After having warned that these private cryptocurrencies could undermine the RBI’s ability to maintain financial stability, the banking regulator has plans afoot to roll out its own digital currency sometime next year.

There are nearly 15 million to 20 million crypto investors in India, with total crypto holdings of $5.34 billion. Recently, bitcoin prices posted healthy recovery by reclaiming the $44,000 mark. 

However, there is no official data available on the size of the Indian crypto market.