T. Rabi Sankar from the Reserve Bank of India compared cryptocurrency to ponzi schemes and said that banning them, not regulating them, would be the “most advisable choice” for the Indian government.

Sankar, the deputy governor for the RBI, told audiences at a keynote address on Feb. 14 that “We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity.”

Sankar feels that regulating crypto would ultimately be condoning its use as a store of value and even a currency in some cases. Merely regulating it could be akin to encouraging its use within the framework laid out by the government. However, he acknowledges that some people will still use crypto if it is banned, just as “drug trafficking is a rampant phenomenon despite a ban.”

He also pointed out that permitting cryptocurrency to exist in a fiat-dominated ecosystem “is bound to have a destabilizing effect on the monetary and fiscal stability of a country.” If crypto is regulated so that it can be used as an investment asset, Sankar said that its utility will rise as a store of value, and could draw more users away from the Rupee.

India is one of many countries where crypto companies and lawmakers have demanded greater regulatory clarity to guide their actions. Without such clarity, it is difficult for businesses to formulate long-term plans for their products and services that they are sure will not break any laws.

On Feb. 11, finance minister Nirmala Sitharaman said that she would not immediately decide whether to legalize or ban crypto leaving India in a prolonged state of regulatory limbo. 

The Indian government has been experimenting with its capabilities in deploying a central bank digital currency (CBDC). Sitharaman revealed on Feb. 1 that she expected to launch a digital rupee program by 2023 to boost economic growth.