Beware of Cryptocurrencies! Warning sounded by RBI Governor Shaktikanta Das
- Even as Bitcoin, Ethereum and memecoins like Dogecoin and Shiba Inu continue to draw attention, RBI Governor Shaktikanta Das has issued a warning about cryptocurrencies.
Even as Bitcoin, Ethereum and memecoins like Dogecoin and Shiba Inu continue to draw global attention, and investors, in huge numbers, Reserve Bank of India (RBI) Governor Shaktikanta Das has issued another warning about cryptocurrencies today.
Das warned investors about the inherent dangers of investing in cruptocurrencies and the danger they pose the the financial system as a whole. Today, Das said that cryptocurrencies are a very serious concern from both macro economic and financial stability points of view.
The ball is in the Central government's court and it is yet to take a decision on it.
RBI governor's comments come just days after many investors lost millions of dollars in an apparent scam related to Squid coin based on Netflix's popular show Squid Game. Also, the biggest of them all, Bitcoin has been hitting a record high as investors increasingly flock to the crypto world. Bitcoin, on Tuesday, hit a record-high $68,513. In fact, according to Bloomberg, the total value of all cryptocurrencies has exceeded $3 trillion.
Squid coin was created by anonymous developers without any links to Netflix and in no time at all, its price skyrocketted. As millions of dollars poured in, the developers shut down their operations, causing the coin's value to plummet to zero. They got away with nearly $30 million - that is how high the market value of the coin reached before the crash. The scam is popularly called ‘rug-pull', in reference to a rug being pulled out from under an unsuspecting person.
Investors did not verify the developers nor their operations carefully before putting in their money. There were many red flags involved that they should have noticed including the important one where they were not allowed to sell their coins.
The reason behind cryptocurrencies like Bitcoin and Ether hitting all-time highs was attributed by many analysts partly to investors searching for a hedge against inflation.
Cryptocurrency risks are apparent otherwise too as can be seen in the case of Coinbase Global whose shares tumbled nearly 12% in postmarket trading, Bloomberg reported. The biggest U.S. digital-asset exchange had reported worse-than-forecast results after hitting a bad patch during the summer a summertime when the cryptocurrency market had plunged.
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