A day after the US Securities and Exchange Commission (SEC) approved bitcoin exchange-traded funds (ETFs) for listing on bourses, Reserve Bank of India (RBI) Governor Shaktikanta Das reiterated his concerns about the potential risks that cryptocurrencies pose to the financial stability of emerging markets. This comes as several ETFs tied to the spot price of bitcoin began trading in the US, marking a significant milestone for the cryptocurrency industry.
The SEC’s approval of 11 bitcoin ETFs followed extensive discussions with top asset managers, including BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. These ETFs offer investors exposure to the world’s largest cryptocurrency without the need to directly hold it, providing a boost to the crypto industry while mitigating some of the risks associated with holding digital tokens.
However, Governor Das remains cautious. He expressed his view that cryptocurrencies are primarily speculative in nature, enabling some individuals to make substantial profits temporarily while leaving the majority of investors at risk. He questioned the need for emerging markets to venture into this space, emphasizing the potential dangers associated with crypto mania.
Governor Das highlighted that even the US capital markets regulator, in approving Bitcoin spot ETFs, has issued necessary warnings to investors to exercise caution. He emphasized that the world, particularly emerging market economies, cannot afford to succumb to crypto mania.
While the US has taken a step towards embracing bitcoin ETFs, the RBI Governor maintains his stance that cryptocurrencies pose a significant threat to the financial stability of emerging markets. He believes that the risks associated with these digital assets are too substantial to overlook, and caution should be exercised to prevent potential negative consequences.
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