Out of the 6,000-odd cryptocurrencies currently in existence, only a few are likely to survive, according to the former RBI Governor Raghuram Rajan.
Rajan, in a recent interview with CNBCTV-18 said that only one or two, or at most, only a handful of the cryptocurrencies that exist today would survive in the future.
“If things have value only because they will be pricier down the line, that’s a bubble,” Rajan said.
The former RBI governor compared the current mania in cryptocurrencies to the tulip mania in the Netherlands in the 17th century.
He added that the issue was that most cryptocurrencies did not have permanent value. Additionally, some of them would survive to facilitate payments, especially cross border payments.
“In the US, crypto is a $2.5 trillion problem that nobody really wants to regulate,” he said.
According to Rajan, part of the problem was the lack of understanding of the space and how to regulate it, among regulators.
He added that the government can examine these crypto entities more closely when they get too big to make sure that there isn’t fraud.
Rajan’s remark come as the bill to ban all private cryptocurrencies and facilitate introduction of the Central Bank Digital Currency (CBDC) topped the government’s busy agenda for the Winter Session of Parliament.
Top cryptocurrencies including Bitcoin, Ethereum, USDT, Shiba Inu, Dogecoin, Sandbox among others crashed overnight on Indian crypto exchanges on Wednesday as investors panicked following the government’s plans on the bill seeking to prohibit private cryptocurrencies while allowing certain exceptions to promote the underlying technology.
Additionally, the former RBI Governor said that the government must focus on the underlying blockchain technology, letting it flourish adding that blockchain ways of transacting were much cheaper, especially across borders.
There has been a fair share of regulatory concerns when it comes to cryptocurrencies.
However, despite regulatory uncertainty and the Reserve Bank of India’s (RBI) concerns, India now has close to 400 cryptocurrency-based start-ups offering various services to the crypto ecosystem.
According to data sourced by BusinessLine from Tracxn, there are 380 crypto start-ups and 12 Non-fungible Tokens-based (NFT) start-ups currently operating in the country, as per previous reports.