RBI must not fall for Trump's crypto circus

The RBI is fortifying India's financial future. If we allow crypto's speculative chaos to take root, we risk dismantling decades of monetary discipline

- SRINATH SRIDHARAN

THE WHITE HOUSE is now the world's biggest crypto exchange — only, the man running it also has skin in the crypto game personally. The news of US President Donald Trump hosting the first-ever White House conference on cryptocurrency this Friday has set off a wave of excitement among crypto enthusiasts worldwide. His family holds vast crypto assets and two of his firms control 80% of a token valued at over $14 billion on paper. If Trump's crypto assets gain legitimacy under his own administration, does that not amount to a self-styled financial monarchy, where regulation serves personal gain?

India, on the other hand, has taken a cautious and prudent approach to cryptocurrency, driven by the Reserve Bank of India's (RBI) clear stance on financial stability. In its December 2024 Financial Stability Report, the RBI laid out unambiguous concerns — crypto's unchecked expansion could undermine monetary policy, create fiscal risks, and even circumvent capital flow regulations. If excessive adoption leads to the diversion of resources from the real economy, what happens to businesses that depend on structured financing? The answer is clear: economic instability.

The irony of crypto is that while its proponents champion decentralisation and financial freedom, the reality is often the opposite. Investors blindly follow the social media pronouncements of self-styled crypto influencers, piling into high-risk assets without understanding the consequences. If history has taught us anything, it is that financial bubbles do not send advance warnings before they burst.