India’s central bank chief delivered a stark warning against investing in cryptocurrencies, saying they lacked the underlying value of even a tulip – in a reference to a speculative bubble that gripped the Netherlands in the 17th Century.
Reserve Bank of India Governor Shaktikanta Das gave his withering assessment of the digital currency craze just days after the Indian government established a taxation framework for cryptocurrencies.
Advocates who had feared New Delhi might even ban digital currencies took the imposition of a tax as a sign of official acceptance, despite the grave reservations held by the country’s central bank.
“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 said in a news conference following a monetary policy meeting.
“And 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, became a parable of greed.
Having warned that private cryptocurrencies could undermine the RBI’s ability to maintain financial stability, the central bank has plans to launch its own digital currency sometime next year.
There are an estimated 15 million to 20 million crypto investors in India, with total crypto holdings of around 400 billion Indian rupees ($5.34 billion).
No official data is available on the size of the Indian crypto market.