Crypto has no value, it's 'not even a tulip,' warns India's central bank governor

Mumbai (Feb 10)  India's central bank chief told investors that cryptocurrencies have no "underlying" value. He added that even tulips are worth more, referring to the Dutch 'tulipmania' bubble in the mid-1600s.

"Private cryptocurrency is a huge threat to macro-economic stability and financial stability...investors should keep this in mind that they are investing at their own risk," Reserve Bank of India Governor Shaktikanta Das said during a news conference following a monetary policy decision. "And these cryptocurrencies have no underlying (value) - not even a tulip."

'Tulipmania' is one of the most talked-about market bubbles, which showed how far speculation could take prices. The Dutch tulip bulb market bubble happened in Holland in the 17th century as speculation and greed drove the value of tulip bulbs to extreme levels.

At Thursday's monetary policy meeting, the RBI surprised markets by keeping its rate unchanged at 4% while mainlining its "accommodative stance."

Das' comments come barely a week after India's finance minister Nirmala Sitharaman announced a 30% tax on income from cryptocurrencies and other digital assets.

Reuters estimated that there are up to 20 million crypto investors in India, with total holdings of around $5.37 billion.

Despite serious concerns regarding the crypto space, India is pushing on to develop its own central bank digital currency (CBDC).

Last week, the country took some concrete steps towards adopting a CBDC, with finance minister Nirmala Sitharaman stating that a digital currency would be introduced in the next financial year that starts on April 1.

"The introduction of a central bank digital currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system," Sitharaman said.

This move came after India's central bank expressed "serious concerns" about private cryptocurrencies, citing financial stability concerns.

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