The Threat of Cryptocurrencies: Understanding Their Value and Impact on the Financial System
Cryptocurrencies cannot be recognized as currencies due to their lack of intrinsic value, as per officials from the Reserve Bank of India (RBI). The RBI, especially, remains opposed to the idea of cryptocurrencies like Bitcoin, considering them a new age currency. According to RBI executives, since cryptocurrencies have no underlying value, they cannot be identified as currency. Consequently, it will be up to the government to make a decision regarding cryptocurrencies.
At present, there are no regulatory bodies behind Bitcoin in India, and thus, income generated from trading must be declared and taxed. Vasudevan, Executive Director at RBI, has stated that cryptocurrencies can pose a significant risk to the financial system. He emphasized the need for self-regulation to ensure greater security within the fintech sector. At the World Economic Forum in Davos, the RBI issued warnings regarding the risks associated with cryptocurrencies.
Bitcoin has experienced rapid fluctuations recently, crossing the $52,000 mark swiftly. Alongside Bitcoin, Ethereum and Solana have also witnessed rapid growth.
