DFS Secretary M. Nagaraju skeptical of cryptocurrencies, says need to exercise caution

Department of Financial Services (DFS) Secretary M. Nagaraju on November 18 said that he is skeptical of cryptocurrencies and there is a need to be "very careful".

"I am very skeptical of cryptocurrency. RBI is also very careful on that. We need to be very careful," said Nagaraju at the 11th SBI Banking & Economics Conclave 2024 on November 18.

Similar views have been said by the Reserve Bank of India's Governor Shaktikanta Das earlier this year.

Das had flagged his concerns that such instruments are “huge risks to financial stability, and monetary stability”, asserting that they may create a situation where the central banks may lose control of money supply in the economy.

May 2024 bulletin of the RBI also said that cryptocurrencies are driven by speculative motives and retail investors need to be more careful, the RBI had said, as it continues to be skeptical of private digital currencies which it sees as a risk to the financial system.

“Our findings suggest that the interest in cryptocurrencies are driven by speculative motives rather than a means of payment for real economic transactions. As the crypto ecosystem lacks accountability and stability and is marked by regulatory ambiguity, retail investors need to be more cautious,” the central bank said in its bulletin released on May 21.Cryptocurrency is a digital asset designed to be used on the internet. The name originates from the fact that all of its transactions are highly encrypted, making the exchanges secure.