Cryptocurrencies are a menace to financial stability, with a value lower than a tulip: RBI Governor Das

Private cryptocurrencies, according to RBI Governor Shaktikanta Das, are a threat to macroeconomic and financial stability, and undermine the central bank’s ability to deal with challenges on both fronts.

The governor warned investors that such assets had no underlying value, “not even a tulip.”

The remarks are a reiteration of institutional worries about such assets that were previously stated, but they take on added weight because they come just days after the Union Budget imposed a 30% tax on gains on such assets.

The move was hailed by crypto enthusiasts as one that “legitimises” their industry.

“Private cryptocurrencies, or whatever you want to call them, pose a threat to our macroeconomic and financial stability.” They will jeopardise the RBI’s ability to address financial and macroeconomic stability challenges,” Das told reporters.

He went on to say that it is his “responsibility” to warn investors, reminding them that they are investing at their own risk.

“They also need to keep in mind that the cryptocurrency has no underpinning, not even a tulip,” Das added, using a historical backdrop to make a point about the value of such products.

It should be noted that the 17th century’s ‘tulip frenzy’ is sometimes mentioned as a classic example of a financial bubble, in which the price of anything rises not because of intrinsic value but because of speculators looking to profit by selling a bulb of the exotic flower.