The Reserve Bank of India (RBI) says a lot of Ponzi schemes in the crypto market as digital currencies have "no underlying cash flows," which means they lack of intrinsic value, TechCrunch reports, citing T. Rabi Sankar, Deputy Governor of RBI. He noted that cryptocurrencies were specifically developed "to bypass the regulated financial system."
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"We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi Schemes, and may even be worse," Sankar said.
Meanwhile, India's Finance Minister Nirmala Sitharaman said that New Delhi and the central bank were working on two regulatory frameworks for cryptocurrencies. Although Sankar rejected to elaborate on the matter, he drew parallel bitcoin bitcoin and tulips in 17th century Netherlands:
"Cryptocurrencies are very much like a speculative or gambling contract working like a Ponzi scheme. In fact, it has been argued that the original scheme devised by Charles Ponzi in 1920 is better than cryptocurrencies from a social perspective."
Earlier in February, India proposed a 30% tax on crypto and non-fundgible tokens (NFTs) as the country is gearing up to launch its own central bank digital currency in 2023. Sitharaman said then that even gift of a cryptocurrency is also proposed to be taxed "at the hand of the recipient," adding that there will be "no deduction with exception of cost of acquisition."
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