Cryptocurrency is not money, its value is ‘purely speculative’: RBI Deputy Governor

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In a bold statement 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. He emphasized that its value is purely speculative, likening it to historical bubbles like tulip mania. Delivered at the Mint Annual BFSI Conclave 2025 in Mumbai on December 12, this critique highlights ongoing tensions between traditional finance and the crypto revolution.

Understanding the Context: A Speech That Challenges Crypto Enthusiasts

Sankar’s remarks come at a time when cryptocurrencies like Bitcoin continue to dominate headlines, with prices soaring and institutional adoption growing globally. Yet, in India—one of the world’s largest crypto markets—the regulatory stance remains cautious. The RBI has long expressed concerns over crypto’s risks, including financial stability threats and potential misuse in illicit activities.

During the conclave, Sankar didn’t mince words. He described cryptocurrency as “just a piece of code,” stripping away the hype surrounding digital assets. But he was quick to praise the underlying innovation: blockchain technology.

“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. It can have many uses… While the technology itself was revolutionary, Bitcoin was just a tool to demonstrate the technology.”

This distinction is crucial. Blockchain’s potential in supply chain tracking, secure voting, and decentralized finance (DeFi) is undeniable. However, Sankar argues that Bitcoin and similar cryptos fail to qualify as legitimate money or even financial assets.

The Historical Roots: From the 1950s to Bitcoin’s Birth

Sankar traced cryptocurrency’s origins back decades, possibly to the 1950s or earlier. This long search for digital money culminated in Bitcoin’s whitepaper in 2008, amid the global financial crisis. Satoshi Nakamoto’s vision was to create a peer-to-peer electronic cash system, bypassing banks and governments.

Yet, according to the RBI official, Bitcoin’s success as a demonstration tool doesn’t translate to real-world currency status. Here’s why he believes it falls short:

No Intrinsic Value: Unlike gold (used in jewelry) or fiat money (backed by government decree), crypto has no inherent utility beyond speculation.
No Promise to Pay: There’s no central issuer guaranteeing redemption, like a central bank does for currency.
Lacks Money’s Core Attributes: Money must serve as a medium of exchange, unit of account, and store of value. Crypto’s extreme volatility undermines these roles.
No Underlying Cash Flows: Stocks or bonds generate dividends or interest; crypto doesn’t.

Sankar’s tulip comparison is particularly striking. In the 1630s Dutch Tulip Mania, bulb prices skyrocketed due to speculation before crashing. Today, Bitcoin’s price swings—reaching highs above $100,000 before corrections—echo this frenzy.

Why Does This Matter for India’s Crypto Landscape?

India’s crypto journey has been turbulent. A 2018 RBI banking ban was overturned by the Supreme Court in 2020, leading to a boom. However, a 30% tax on gains and 1% TDS on transactions have cooled enthusiasm. Sankar’s comments reinforce the RBI’s view that crypto poses systemic risks.

Crypto vs. Traditional Money	Cryptocurrency	Fiat Money (e.g., INR)
Intrinsic Value	No	Government backing
Volatility	High	Low
Medium of Exchange	Limited acceptance	Widely used
Regulatory Oversight	Minimal	Strict

Despite this, proponents argue crypto’s fixed supply (e.g., Bitcoin’s 21 million cap) makes it a superior store of value against inflation. Global trends like U.S. Bitcoin ETFs and El Salvador’s adoption challenge the “not money” narrative. In India, over 100 million users trade crypto, per industry estimates, fueling calls for clearer regulations.

Beyond Bitcoin: Blockchain’s True Potential

Sankar’s praise for blockchain opens doors to practical applications. In India, projects like CBDC (Central Bank Digital Currency) pilots show the RBI embracing DLT without the speculative baggage of crypto.

Remittances: Faster, cheaper cross-border payments via blockchain could save billions.
Identity Verification: Self-sovereign identities for the unbanked.
Tokenized Assets: Real estate or art on blockchain for fractional ownership.

Experts predict blockchain could add $1 trillion to India’s GDP by 2030, per Nasscom reports. Separating the tech from the token is key to unlocking this.

The Speculative Trap: Lessons from Market Cycles

Is crypto’s value purely speculative? Data suggests yes for now. Bitcoin’s correlation with tech stocks and its halving-driven rallies point to hype over fundamentals. Yet, as adoption grows—think MicroStrategy’s billions in BTC holdings—the narrative evolves.

Investors should weigh risks: regulatory crackdowns, hacks (e.g., $600M Ronin breach), and 99% altcoin failures. Diversification and education are vital in this wild west of finance.

What’s Next for Crypto in India?

The government’s crypto bill, delayed since 2021, looms large. Will it ban private cryptos like China or regulate like the EU’s MiCA? Sankar’s words signal caution, but innovation demands balance.

For now, his verdict stands: Cryptocurrency is not money. It’s a speculative bet on technology’s future. As the RBI Deputy Governor put it, without intrinsic value or cash flows, it’s neither currency nor asset—just code riding a wave of belief.

Stay tuned as this debate heats up. What do you think—speculative bubble or monetary revolution? Share in the comments.