Little knowledge is a dangerous thing

They say a little knowledge is a dangerous thing. But what happens when powerful institutions act without any knowledge whatsoever about the impact of their decisions. Case in point is the ban on banks from dealing with crypto exchanges by the Indian Central Bank - Reserve Bank of India.

https://www.coindesk.com/rbi-bars-banks-business-crypto-firms/

"India's central bank said Thursday that the banks and financial institutions it oversees will no longer be allowed to work with cryptocurrency exchanges and other related services.

In the same statement on Thursday, the RBI said that it had put together a working group to study the issue of issuing its own digital currency."

Now I am a strong critic of any policy decision that comes out of India around blockchain technology or cryptocurrency assets. India is a country where if a banking scam happens using Letter of Understanding, then the central bank takes action by banning the product itself. Its like banning cars if a case of road accident happens.

Second, most officials, by taking such decisions, belittle the intelligence of people who do see value in crypto assets. The least they can do is take clues from other countries that want to regulate crypto assets as opposed to banning them.

For a country that is dealing with a genuine systematic risk of banking frauds and non-performing loans, acting in such a crude way to deal with something that is not a risk is totally ABSURD.

Hope someone intelligent helps them come up with better ways of regulating this market.

P.S. Digital Rupee - Even more ridiculous. Rampant corruption executed in the form of bribes is all cash. And money kept in an online bank account is digital anyway. Moreover customer deposits are roughly 40 to 50% of liabilities at all Indian state owned and private banks and are the single biggest source of capital used to finance the whole economy. I don't see what changes if instead of storing normal currency with a bank, i start storing rupee tokens.