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A day after the US Securities and Exchange Commission (SEC) permitted bitcoin exchange-traded funds (ETFs) to be listed on exchanges, RBI Governor Shaktikanta Das said that his view remains unchanged that cryptocurrencies pose a significant threat to the financial stability of emerging markets.
Several ETFs linked to the spot price of bitcoin began trading in the US on Thursday after receiving approval from the SEC. This development is considered a milestone for the cryptocurrency industry, which has sought regulatory approval for such financial products for over a decade.
The SEC’s approval includes 11 ETFs, opening the door to more widespread investments in the world’s largest cryptocurrency without the need to hold the digital token directly. This is viewed as a game-changer for bitcoin, offering investors exposure to the cryptocurrency without the associated risks of direct ownership.
RBI Governor Shaktikanta Das expressed reservations about cryptocurrencies, emphasising that just because something is being done elsewhere doesn’t mean it should be emulated. He cautioned against embracing the speculative nature of cryptocurrencies, stating that while some may make significant profits for a time, the majority may not experience such gains consistently.
“The question arises, why do you need to travel down that road? What is it that you get out of it? It is the speculative nature of that product that enables some people to make, perhaps, big money for some time, but the majority of the people are not going to make big money all the time,” he said.
Das highlighted the speculative nature of cryptocurrencies and the risks associated with them. He pointed out that even the US capital markets regulator, while approving Bitcoin spot ETFs, issued necessary warnings to investors to be cautious. The governor emphasised that the world, especially emerging market economies, cannot afford to succumb to “crypto mania.”
(With Reuters inputs)
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