RBI Deputy Governor Questions Bitcoin’s Real Value, Reigniting India’s Crypto Debate
RBI Deputy Governor Compares Bitcoin to Tulip Mania, Renewing India’s Crypto Policy Debate
India’s long-running debate over cryptocurrencies resurfaced sharply this week after Reserve Bank of India Deputy Governor T. Rabi Sankar delivered a pointed critique of Bitcoin, likening its price surge to the infamous Dutch tulip mania of the 17th century.
Speaking at the Mint Annual BFSI Conclave 2025, Sankar questioned the fundamental value of Bitcoin, arguing that the world’s largest cryptocurrency lacks intrinsic worth, issuer backing, and predictable cash flows. His remarks reinforced the central bank’s longstanding skepticism toward private cryptocurrencies and reignited discussion over India’s regulatory future in digital assets.
According to Hokanews, Sankar’s comments were among the strongest public statements from an RBI official this year, underscoring a persistent divide between regulators focused on financial stability and a fast-growing market driven by retail and institutional interest.
Bitcoin Under Fire at a High-Profile Financial Forum
During his address, Sankar dismissed the notion that Bitcoin functions as a stable or reliable financial instrument. He emphasized that Bitcoin is not supported by any issuing authority, produces no income streams, and derives its valuation primarily from market sentiment.
“These characteristics,” Sankar said, “make it difficult to justify Bitcoin as a sound asset from a central banking perspective.”
By invoking the tulip mania, one of history’s most frequently cited speculative bubbles, Sankar framed Bitcoin’s price appreciation as a cautionary tale. Tulip bulbs in 17th-century Holland reached extraordinary prices driven by speculation before collapsing abruptly, leaving investors with severe losses.
Sankar’s comparison was intended to highlight volatility risks and warn retail investors against chasing rapid gains without understanding underlying fundamentals.
Volatility and Speculation Take Center Stage
At the heart of Sankar’s argument was the belief that Bitcoin’s valuation is largely sentiment-driven rather than grounded in economic fundamentals. He suggested that speculation, social momentum, and market psychology play a greater role in price movements than utility or intrinsic value.
From the RBI’s perspective, such dynamics pose risks not only to individual investors but also to broader financial stability. Sankar cautioned that widespread exposure to unregulated digital assets could amplify systemic risk, particularly during periods of market stress.
He also argued that rising prices do not necessarily equate to value creation. In his view, sustainable financial assets require trust, institutional support, accountability, and regulatory oversight.
These concerns mirror previous statements from RBI officials, who have repeatedly expressed reservations about cryptocurrencies’ impact on monetary sovereignty, capital controls, and consumer protection.
India’s Crypto Market Grows Despite Regulatory Skepticism
While regulators remain cautious, India’s crypto market continues to expand. With an estimated 119 million cryptocurrency users, India now ranks as the world’s largest crypto user base by participation.
Much of this growth is driven by younger investors. Industry data suggests that more than 37 percent of Indian crypto users belong to Generation Z, drawn by digital-native financial products and alternative investment opportunities.
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| Source: Xpost |
This expansion has occurred despite some of the world’s most stringent crypto tax policies. India imposes a 30 percent tax on crypto profits and a 1 percent tax deducted at source on every transaction. These measures significantly reduced trading volumes after their introduction but did not eliminate participation.
According to Hokanews, exchanges continue onboarding new users, and retail interest remains resilient across market cycles, suggesting that regulatory pressure has slowed but not stopped adoption.
Bitcoin’s Market Reality Tells a Different Story
At the time of Sankar’s remarks, Bitcoin was trading near the $90,000 level, approximately 30 percent below its all-time high. Despite this pullback, long-term holder data indicates continued accumulation, and institutional interest remains present in global markets.
Supporters argue that Bitcoin’s value proposition lies not in issuer backing or cash flows but in scarcity, decentralization, and censorship resistance. With a fixed supply capped at 21 million coins, proponents view Bitcoin as a hedge against inflation and monetary debasement.
Global adoption metrics continue to rise, particularly in emerging markets. Blockchain analytics firm Chainalysis consistently ranks India among the top countries for grassroots crypto adoption, reflecting strong peer-to-peer usage and retail engagement.
These trends complicate the narrative presented by regulators, as market behavior suggests persistent demand even amid skepticism and regulatory constraints.
A Widening Gap Between Policy and Market Sentiment
The divergence between regulatory caution and market enthusiasm highlights a growing policy dilemma. Central banks prioritize stability, oversight, and control, while cryptocurrencies operate on principles of decentralization and permissionless access.
Sankar’s remarks were widely interpreted as a call for caution rather than reform. India still lacks a comprehensive legal framework for cryptocurrencies, and internal policy discussions continue among regulators, lawmakers, and financial authorities.
In the absence of clear legislation, crypto activity has continued at the grassroots level. Investors, developers, and entrepreneurs are building and participating even as regulatory uncertainty persists.
Bitcoin, in particular, sits at the center of this tension. No longer merely a speculative asset, it has become a symbol of broader ideological debates about money, trust, and the future of financial systems.
Lessons From History or a Misplaced Comparison?
Critics of the tulip mania comparison argue that it oversimplifies Bitcoin’s role and ignores its growing utility. Unlike tulip bulbs, Bitcoin operates on a global, decentralized network that enables cross-border transactions, programmable finance, and digital ownership.
They also point to increasing institutional participation, including exchange-traded products and custody solutions, as evidence that Bitcoin is becoming integrated into traditional financial systems rather than existing purely as a speculative fad.
Nevertheless, regulators like the RBI remain unconvinced, viewing these developments as insufficient to offset concerns about volatility, consumer risk, and regulatory arbitrage.
What Comes Next for Crypto in India?
India’s crypto future remains uncertain. While outright bans appear unlikely given the scale of adoption, a tightly controlled regulatory framework could emerge that limits usage, increases compliance burdens, or favors state-backed digital currencies.
The RBI has been a strong proponent of a central bank digital currency, positioning it as a safer alternative to private cryptocurrencies. Officials argue that a digital rupee could deliver many of the efficiencies of crypto without the associated risks.
For now, the debate continues, with no clear resolution in sight. Market participants remain optimistic, while policymakers urge restraint.
Conclusion
Deputy Governor T. Rabi Sankar’s comparison of Bitcoin to tulip mania underscores the deep divide between India’s financial regulators and its rapidly growing crypto community. His remarks reflect longstanding concerns about speculation, volatility, and systemic risk, even as market data points to sustained demand and global adoption.
As reported by Hokanews, the clash between policy caution and market reality is shaping the next phase of India’s crypto journey. Whether regulators and innovators can find common ground remains an open question, but one thing is clear: Bitcoin is no longer just a price chart. It has become a focal point for debates about ideology, trust, and the future of money itself.
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