By Srinath Sridharan
The White House is now the world’s biggest crypto exchange — only, the man running it also has skin in the crypto game personally. The news of US President Donald Trump hosting the first-ever White House conference on cryptocurrency this Friday has set off a wave of excitement among crypto enthusiasts worldwide. His family holds vast crypto assets and two of his firms control 80% of a token valued at over $14 billion on paper. If Trump’s crypto assets gain legitimacy under his own administration, does that not amount to a self-styled financial monarchy, where regulation serves personal gain?
India, on the other hand, has taken a cautious and prudent approach to cryptocurrency, driven by the Reserve Bank of India’s (RBI) clear stance on financial stability. In its December 2024 Financial Stability Report, the RBI laid out unambiguous concerns — crypto’s unchecked expansion could undermine monetary policy, create fiscal risks, and even circumvent capital flow regulations. If excessive adoption leads to the diversion of resources from the real economy, what happens to businesses that depend on structured financing? The answer is clear: economic instability.
The irony of crypto is that while its proponents champion decentralisation and financial freedom, the reality is often the opposite. Investors blindly follow the social media pronouncements of self-styled crypto influencers, piling into high-risk assets without understanding the consequences. If history has taught us anything, it is that financial bubbles do not send advance warnings before they burst.
The crypto world is speculating on the RBI’s possible softening stance based on the governor’s remarks about a discussion paper on the horizon. This signals a shift from strong opposition just six months ago, when the RBI warned that cryptocurrencies threaten financial stability and could undermine central bank control. The RBI’s firm stance has been echoed on global platforms, from the International Monetary Fund to the Bank for International Settlements. So, the real question is: Will the RBI hold its ground, or will Trump’s crypto euphoria and geopolitical pressures test its resolve?
Cryptocurrency, by design, facilitates opaque financial transfers. While purchase transactions may be routed through official banking channels with KYC, what happens to those assets once inside a digital wallet is an entirely different story. Can anyone say with certainty that no individual has exceeded India’s annual liberalised remittance scheme limit using crypto? If enforcement agencies struggle to track illicit funds in conventional banking systems, tracing decentralised crypto transactions is like looking for a needle in a haystack — except that the haystack keeps moving.
The push for global crypto adoption is not just about finance but also about geopolitical influence. The US has a long history of shaping global markets in its favour through financial instruments and has always used financial innovation as a tool of diplomacy. If India bends under this pressure, it risks aligning its financial system with a model that prioritises short-term speculation over long-term stability. The US economy operates on high debt, aggressive risk-taking, and frequent bailouts. That is not the model India should follow.
The crypto industry thrives by seeking out the weakest regulatory oversight. It shifts between jurisdictions that offer the most lenient rules. Investors follow, chasing opportunities that often turn into high-risk traps. If Trump’s America becomes the new promised land for crypto, it could trigger a wave of capital flight. Indian investors might be drawn into this environment, thinking they are entering a stable market. The reality is often different. Every major crypto crash has left ordinary investors in financial ruin, while the industry’s biggest players walk away unscathed. India should not allow its investors to be pulled into yet another speculative storm.
India has built a strong digital finance ecosystem without relying on speculative crypto assets, including United Payments Interface, Aadhaar-enabled payments, and the digital rupee. These are meaningful innovations that support real economic activity. The focus should be on strengthening these frameworks, not on accommodating unregulated digital assets. The RBI isn’t just managing today’s risks; it is fortifying India’s financial future against speculative chaos. If we allow crypto’s speculative chaos to take root, we risk dismantling decades of monetary discipline.
This Sunday, President Trump announced the formation of a US Crypto Strategic Reserve. This move signals a dramatic shift in the government’s stance on digital assets, integrating major cryptocurrencies such as Bitcoin, Ethereum, XRP, and Cardano (ADA) into the country’s financial infrastructure. If this actualises, it could legitimise crypto as a state-backed asset class, blurring the lines between regulation and speculation.
The RBI’s job is thankless, but crucial — especially when crypto is hailed as revolutionary. The RBI’s vigilance has shielded the economy from multiple global shocks, including the 2008 financial crisis and, more recently, the Silicon Valley Bank collapse and the crypto crashes of FTX and Terra-Luna.
A country drowning in debt, rocked by a financial crisis almost every decade, and now led by one of the world’s largest crypto holders is hardly a model of financial prudence. If anything, Trump’s actions should serve as a cautionary tale of why regulatory capture is dangerous.
Let the White House crypto party go on. Who knows? Maybe America’s crypto czar, David Sacks, will hear Trump’s famous “You’re fired!” — right after Trump books his profits.
The writer is corporate advisor & independent director on corporate boards.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.