Cryptocurrency is , its value is ‘purely speculative’: RBI Deputy Governor

In a candid address that has sparked debates across the financial world, the Reserve Bank of India’s (RBI) Deputy Governor T Rabi Sankar declared that cryptocurrency is not money. Calling its value “purely speculative,” he likened it to the infamous tulip mania bubble. Speaking at the Mint Annual BFSI Conclave 2025 in Mumbai, Sankar dismantled the hype surrounding digital assets like Bitcoin, emphasizing their lack of intrinsic worth.

This statement comes at a time when cryptocurrency markets are booming globally, with Bitcoin hitting new highs. For Indian investors navigating the volatile crypto landscape, these words from a top RBI official carry significant weight. Let’s dive deeper into what Sankar said, why it matters, and what it means for the future of blockchain technology and crypto in India.

RBI Deputy Governor’s Key Remarks: Crypto as ‘Just a Piece of Code’

Sankar didn’t mince words. He described cryptocurrency as “just a piece of code” with no real backing. During his speech on December 12, he traced the origins of crypto, noting that its evolution stemmed from decades of research dating back to the 1950s or earlier. Bitcoin, he explained, emerged as the culmination of this quest.

“The Bitcoin, or rather the Blockchain technology that underlined the Bitcoin, demonstrated that a digital token can be transferred between unknown counterparts without a need for an intermediary. This technology was revolutionary.”

Here’s the crucial distinction Sankar made: While blockchain technology is groundbreaking—with applications in supply chain, finance, and beyond—Bitcoin itself was merely a proof-of-concept. It showcased peer-to-peer transfers without banks or middlemen, but that doesn’t make it money.

The Revolutionary Side of Blockchain Technology

Sankar praised blockchain as a game-changer. This decentralized ledger system ensures transparency, security, and immutability. Imagine:

• Cross-border payments without hefty fees or delays.
• Secure voting systems immune to tampering.
• Traceable supply chains that verify product authenticity from farm to table.
• Smart contracts that automate agreements without lawyers.

India, with its booming fintech sector, stands to benefit immensely. RBI’s own digital rupee (CBDC) pilot leverages similar tech, proving that innovation doesn’t require speculative tokens.

Why Cryptocurrency Fails the ‘Money’ Test

At its core, Sankar argued, crypto lacks the fundamental attributes of money. Traditional money—fiat currencies like the rupee or dollar—serves three key functions:

1. Medium of exchange: Accepted widely for goods and services.
2. Unit of account: Measures value consistently.
3. Store of value: Retains purchasing power over time.

Cryptocurrencies stumble here. Bitcoin’s price swings wildly—up 50% one month, down 30% the next—making it unreliable. Sankar highlighted:

• No intrinsic value: Unlike gold (used in jewelry) or fiat (backed by governments).
• No promise to pay: No central issuer guarantees redemption.
• No underlying cash flows: Not like stocks (dividends) or bonds (interest).

To drive the point home, he compared crypto’s price to tulip bulbs during the 17th-century Dutch mania. Back then, rare tulips fetched fortunes until the bubble burst, leaving holders with worthless flowers. Today’s crypto frenzy mirrors that speculation, fueled by FOMO rather than fundamentals.

Historical Evolution: From 1950s Ideas to Bitcoin

The roots of cryptocurrency run deep. In the 1950s, cryptographers explored digital cash concepts amid rising concerns over centralized banking. David Chaum’s eCash in the 1980s and Adam Back’s Hashcash in the 1990s laid groundwork. Satoshi Nakamoto’s 2008 Bitcoin whitepaper brought it all together, launching the first blockchain in 2009.

But as Sankar noted, Bitcoin was a demo, not destiny. Its fixed supply (21 million coins) creates scarcity hype, but without real-world utility, it’s speculative gambling.

Implications for Indian Crypto Investors and Regulators

India’s crypto scene is massive—over 100 million users despite regulatory hurdles. The government imposed a 30% tax on gains and 1% TDS on trades in 2022, signaling caution. Sankar’s views align with RBI’s long-standing skepticism, including past banking bans (later overturned by courts).

What should investors do?

• Diversify: Don’t bet the farm on volatile assets.
• Focus on utility: Look for projects with real use cases, not memes.
• Stay compliant: Use registered exchanges like WazirX or CoinDCX.
• Watch for regs: A full framework might emerge in 2025.

Globally, the U.S. SEC treats most cryptos as securities, while El Salvador made Bitcoin legal tender (with mixed results). India’s balanced approach—embracing blockchain, regulating crypto—could set a model.

Beyond Speculation: Real Value in Crypto Ecosystem

Not all is doom. Stablecoins like USDT pegged to dollars offer stability for remittances (huge for India). DeFi platforms provide lending without banks, and NFTs enable digital ownership. Yet, Sankar’s point stands: These are innovations on blockchain, not money replacements.

RBI’s CBDC, e-rupee, addresses pain points like counterfeiting and financial inclusion without speculation risks. Over 1 million users have transacted via UPI-linked pilots.

Conclusion: Time to Separate Hype from Reality

RBI Deputy Governor T Rabi Sankar’s assertion that cryptocurrency is not money and its value is purely speculative cuts through the noise. Blockchain’s revolution is undeniable, but treating Bitcoin as tulip 2.0 invites disaster. For Indian investors, this is a wake-up call: Prioritize fundamentals, embrace regulated innovation, and avoid the bubble trap.

As crypto evolves, will regulators greenlight more? Or tighten the leash? Stay tuned— the blockchain battle is just heating up. What are your thoughts on Sankar’s views? Share in the comments below!

Keywords: RBI cryptocurrency stance, Bitcoin intrinsic value, blockchain vs crypto, tulip mania crypto comparison

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