India warns cryptos are the new tulips; Kenya weighs digital currency: Crypto moves

India warns cryptos are the new tulips; Kenya weighs digital currency: Crypto moves
Tulipmania could be a warning from history about cryptocurrencies (Shutterstock)
Short Url
Updated 11 February 2022

India warns cryptos are the new tulips; Kenya weighs digital currency: Crypto moves

India warns cryptos are the new tulips; Kenya weighs digital currency: Crypto moves

Countries’ differing views on crypto assets were again on show this week as Kenya began a consultation on the potential launch on a central bank digital currency, while India’s central bank chief compared private crypto assets unfavourably with tulips, in reference to the 17th century speculative bubble.

Reserve Bank of India Governor Shaktikanta Das warned against investment in cryptocurrencies days after the Indian government announced a taxation framework for the digital assets in a sign of official acceptance following concern they may be banned in the country.

"Private cryptocurrency is a huge threat to macro-economic stability and financial stability...investors should keep this in mind that they are investing at their own risk," Das said in a news conference following a monetary policy meeting. "And these cryptocurrencies have no underlying (value) - not even a tulip.”

Tulipmania erupted in the Netherlands in 1634 when prices for the fashionable flowers accelerated to unsustainable heights before crashing in February 1637, marking the first speculative bubble.

About 20 million investors in India are believed to hold around 400 billion Indian rupees ($5.34 billion) of crypto assets.


Further west, the Central Bank of Kenya has asked the public to share their opinions on the potential introduction of a central bank digital currency.

It acknowledged the risks of such a move, including financial exclusion for those without access to technological infrastructure or knowledge and outflows from commercial banks, while pointing to benefits, including reducing cross-border payment costs.

For that to happen, all countries in the region would need to participate in order to flatten "the multi-layered correspondent banking structure" and shorten the payment chains, the bank said in a statement.

"The balance of risks and benefits of central bank digital currency will vary from one economy to another," it said.

Last year, Tanzanian government officials they were working on a directive from the president to prepare for the introduction of digital currencies.

China’s e-yuan is reportedly the main form of payment within the Winter Olympics bubble, beating even Visa, which is the exclusive credit- and debit-card provider at the games. As of the end of January, 261 million people had signed up for e-yuan wallets on Android or Apple app stores, about one fifth of the Chinese population.


In the United States, one of business journalism’s most famous names, Forbes, is going public via a special purpose acquisition company, or SPAC, and taking a $200 million investment from the world’s largest cryptocurrency exchange Binance in the process.

Binance will help advise Forbes on its digital asset and "Web3" strategy, a version of the internet based on blockchain-based decentralised apps.

Questions have been raised by what effect the investment might have on Forbes’ journalism. Last February, Binance dropped a lawsuit against Forbes in which it had accused two of its journalists of defamation over an article regarding Binance’s corporate structure.

"I can confirm Forbes's editorial independence will remain sacrosanct, and entirely independent from Binance," Binance spokesperson Simon Matthews told Reuters.