© Getty Images / Westend61

The deputy governor of the Reserve Bank of India compared digital currencies to a Ponzi scheme

T Rabi Sankar, the deputy governor of the Reserve Bank of India (RBI), advised the Indian government to ban cryptocurrencies on Monday - comparing digital currencies to Ponzi schemes and branding them a threat to control of the economy.

In a speech to the Indian Banks Association, Sankar warned that cryptocurrencies threaten the financial sovereignty of a country and make it susceptible to strategic manipulation by private corporates creating these currencies or governments that control them.

All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India

Arguing that cryptocurrencies have no intrinsic value, Sankar claimed they are akin to Ponzi Schemes, and may even be worse, and said that the technology’s philosophy to bypass the regulated financial system should be reason enough to treat them with caution.

Sankar also accused cryptocurrencies of at least potentially facilitating anti-social activities, and warned that they would wreck the currency system, the monetary authority, the banking system, and in general government’s ability to control the economy if left to continue.

India has the highest number of cryptocurrency owners in the world at more than 100 million, or roughly 7.3% of the country’s population, according to cryptocurrency payments service TripleA.

Several countries already have bans on cryptocurrency, including Egypt, Morocco, Iraq, and China.

Earlier this month, Indian Finance Secretary T V Somanathan vowed that cryptocurrency would never be a legal tender in India, unlike El Salvador, which became the first country in the world to make Bitcoin legal tender last year.

Legal tender means by law it is accepted in settlement of debts. India will not be making any crypto asset as a legal tender, he said, concluding that only the Indian rupee would be legal tender in India.