Of the 6.000 cryptocurrencies currently in existence, only a few could survive, according to former RBI governor Raghuram Rajan.
Rajan, in a recent interview with CNBC TV-18, said that only one or two, or at most, only a handful of the cryptocurrencies that exist today will survive in the future.
"If things are worth only because they are going to be more expensive down the line, this is a bubble," Rajan said.
Problems with regulation
The former RBI governor compared the current cryptocurrency craze to the tulip craze in the Netherlands in the 17th century.
He added that the problem was that most cryptocurrencies didn't have permanent value. Furthermore, some of them would survive to facilitate payments, especially cross-border payments.
"In the US, cryptocurrencies are a $ 2,5 trillion problem that nobody really wants to regulate," he said.
According to Rajan, part of the problem was the lack of understanding of space and how to regulate it, among regulators.
He added that the government can take a closer look at these cryptographic entities when they get too large to make sure there is no fraud.
Rajan's remark came as the bill to ban all private cryptocurrencies and facilitate the introduction of Central Bank Digital Currency (CBDC) at the top of the government's agenda for the winter session of Parliament.
India wants to ban cryptocurrencies
Major cryptocurrencies including Bitcoin, Ethereum, USDT, Shiba Inu, Dogecoin, Sandbox, among others, crashed overnight on Indian cryptocurrency exchanges on Wednesday as the Investors panicked following the government's plans on the bill seeking to ban private cryptocurrencies while allowing some exceptions to promote the underlying technology.
Additionally, the former RBI governor said the government needs to focus on the underlying blockchain technology, letting it thrive, adding that blockchain transaction modes were much cheaper, especially across borders.
There has been a fair amount of regulatory concerns when it comes to cryptocurrencies.
However, despite the regulatory uncertainty and concerns of the Reserve Bank of India (RBI), India now has nearly 400 cryptocurrency-based start-ups offering various services to the crypto ecosystem.
According to data provided by BusinessLine by Tracxn, there are 380 crypto startups and 12 non-fungible token-based (NFT) startups currently operating in the country, as per previous reports.