Reserve Bank Governor Shaktikanta Das on Thursday termed cryptocurrencies a “clear danger” and said anything that derives value based on make-believe, without any underlying, is just speculation under a sophisticated name.

“We must be mindful of the emerging risks on the horizon. Cryptocurrencies are a clear danger ... While technology has supported the reach of the financial sector and its benefits must be fully harnessed, its potential to disrupt financial stability has to be guarded against,” Das in the Financial Stability Report.

Liquidity conditions

The report said there has been a major shift in global liquidity conditions and repositioning has started affecting global financial flows. One of its early ramifications is reflected in the crypto ecosystem with one stable coin losing almost all its value and another de-pegging from the US dollar, underscoring the need for regulatory guardrails to ensure financial stability and consumer and investor protection.

“The growing threat of the crypto-assets ecosystem warrants drastic approaches by national authorities. Ongoing challenges relating to cyber risk and climate-related financial risks are the two other major focus areas for policymakers,” RBI said.

The central bank has been raising concerns over allowing cryptocurrencies even as the government is yet to finalise a policy.