Shaktikanta Das’ appointment as RBI governor the death knell for cryptocurrencies in India?

Following Urjit Patel’s sudden resignation as the RBI governor, the government has moved in swiftly to appoint Shaktikanta Das as the new governor of India’s central bank. Das, who will become the 25th governor of RBI, has served as the Economic Affairs Secretary for three years between 2015-2017 and was also a member of the 15th Finance Commission. While Das’s credentials for leading this prestigious post cannot be doubted, his appointment may just spell the death knell for the cryptocurrency market in India. 

Shaktikanta Das is a known critic of cryptocurrencies and was a part of the first government panel set up in April 2017 to provide recommendations for regulation. Earlier this year, he had called for a ban on virtual currencies stating that it is impossible to regulate them effectively. In an interview with Quartz, Das had said: 

“Let us accept that it would not be possible to regulate it effectively. Because they will do transactions from their houses. You cannot enter every home to check what transactions are going on. So, I think this is a serious challenge, and this should not be allowed at all.”

Das’ opinion as the RBI governor will certainly weigh in as the RBI has already made cryptocurrency trading extremely inconvenient through the banking ban imposed earlier this year. He is also an influential member in the financial sector and was also a part of the board at the Securities and Exchange Board of India (SEBI), the country’s securities regulator.

In the interview with Quartz, he had also said that cryptocurrencies are not backed by an asset base, created out of ‘thin air’, without legal provisions and come with the threat of money laundering, terror financing and unaccounted transactions. Looking at his views on this nascent market, it looks extremely difficult to expect a positive outcome to cryptocurrency market’s regulatory stalemate with RBI.

The future of the cryptocurrency market is now dependent on two key aspects:

  1. The outcome of the RBI Cryptocurrency Case going on in the Supreme Court
  2. The contents of the draft regulatory framework which is expected to be provided by the Subhash Chandra Garg panel in December.

Stay tuned for all the updates!