Bitcoin is back in the spotlight – this time in India!
Recent comments by a senior Reserve Bank of India (RBI) official have sparked a conversation in the country about what Bitcoin is [BTC] is real… and what it isn’t.
Although the comments generated a lot of reaction online, there is more to it than you think.
The RBI isn’t buying the crypto talk
At a media event in Mumbai, RBI Deputy Governor T. Rabi Sankar made things clear. Stablecoins simply do not pass the test of what money should be.
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He argued that stablecoins, unlike sovereign currencies, do not carry a clear promise to pay, a feature he said is critical to any credible form of money. According to him, its benefits are exaggerated, while the risks (price instability and weaker control over monetary policy) are real.
“In addition to facilitating illicit payments and circumventing capital measures, stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation and system resilience…”
Sankar also returned to the idea that cryptocurrencies have inherent value. Referring to Bitcoin’s origins, he described it as a showcase of technology rather than an actual currency, adding that its value is largely speculative.
The RBI continues to support the use of government-backed money backed by global institutions such as the IMF.
Crypto Twitter is pushing back
The community argued that Bitcoin and stablecoins pose little threat to the rupee. One user even called the central bank’s understanding of crypto is outdated.
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One user pointed it out that stablecoins are already being used by Indians for faster and cheaper money transfers, often reducing costs by a wide margin compared to traditional routes.
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Others warned that delaying a framework for INR-backed stablecoins could backfire, allowing dollar-backed tokens to dominate instead.
They added that programmable, on-chain payments could complement systems like UPI. This is especially true for cross-border use cases where existing rails in India have limited reach.
A strange contradiction
Despite openly rejecting Bitcoin, the RBI’s balance sheet moves in close synchrony with Bitcoin’s biggest rises and falls. When RBI liquidity increases, Bitcoin tends to rise. When liquidity is tighter, Bitcoin weakens.
Source: Alpharactal
That’s not to say RBI is driving Bitcoin, but the contrast is definitely uncomfortable.
If Bitcoin isn’t money, why does it keep moving with the same liquidity forces that shape the global financial system? And why do RBI’s moves correlate most with BTC?
Final thoughts
- RBI may reject Bitcoin, but liquidity cycles are in line with BTC’s movements.
- The gap between policy rhetoric and market reality is widening.