Former Reserve Bank of India (RBI) Governor Raghuram Rajan said on Wednesday that out of the nearly 6,000 odd cryptocurrencies only one or two or a ‘handful’ of them will likely survive. His remarks come a day later after the government listed an introduction in Parliament for a bill that bans all private cryptocurrencies with some exceptions.
Appearing in an interview with CNBC’s TV18, the ex-governor of India’s Central Bank said that cryptocurrencies have no permanent value and that they “have value only because there is a greater fool out there willing to buy.”
According to him, out of the 6,000 odd cryptocurrencies, only some will survive to provide payment, especially among cross-border payments.
"Do we really need 6,000 cryptocurrencies to do payments? One or two or may be a handful, that is going to survive to be used for payments even if the technology is so useful that it is a substitute for cash and currency. That would suggest that most cryptos are unlikely to survive with high values going forward."
Comparing the current fad in cryptocurrencies to the tulip mania in the Netherlands in the 17th century, he said:
“Cryptos may pose the same problem as unregulated chit funds, which take money from people and go bust, a lot of people holding crypto assets are going to be aggrieved.”
Rajan's comments come a day after the government listed an introduction for the 'The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021' that seeks to prohibit private cryptocurrencies while promoting its underlying technology.
Set to be introduced in the winter session of Parliament beginning November 29, the bill also seeks to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. If passed, the bill will prohibit people from transacting in most cryptocurrencies. According to estimates, there are 15 million to 20 million crypto investors in India with total holdings of around 400 billion INR.