While India’s parliament considers a potential nationwide ban on all private virtual currencies, a former governor of India’s central bank says some cryptocurrencies have a “potential future” in the global economy.

Raghuram Rajan, ex-governor of India’s central bank and former chief economist at the International Monetary Fund, made his comments at a Reuters Global Markets Forum on Wednesday. His views contrast with those of the current leadership at the Reserve Bank of India, the country’s central bank, which has consistently called for a ban on all digital currencies, except virtual currencies issued by state.

Fast facts

  • Cryptocurrencies have a “potential future” despite their volatile prices if proper use cases emerge, said Rajan, now a professor at the University of Chicago Booth School of Business.

  • While Rajan believes cryptocurrency prices will keep rising, he said that they need to find proper use cases to live up to their potential. “Cross border payments are one area which is wide open, because of the huge transaction costs of making cross border payments,” he said, according to a Livemint report.
  • Rajan, however, remains skeptical of the fundamentals behind cryptocurrency valuations other than market exhilaration and easy monetary policies. “Right now, in this heady environment with asset prices really picking up, many cryptos are also being valued — not so much as a means of payments, but as assets in their own right,” Rajan said.
  • Rajan said the value of cryptos needs to be evaluated in terms of their usefulness in the future. “Yes, some of them have value because they have value, and maybe that will persist. I’m not going to say that Bitcoin is going to implode tomorrow. But I will say that I would be much more confident about the value of these cryptos once they find proper use cases, and the technology is evolving to make that happen,” he said.
  • Rajan is more positive on stablecoins, or cryptocurrencies that are pegged to fiat currencies like the U.S. dollar or euro. He called for speedy introduction of appropriate regulations for stablecoins.
  • Rajan’s views clash with those of the Reserve Bank of India, which has consistently called for a ban on all private virtual currencies. India’s crypto regulation bill is currently awaiting cabinet approval. The finance minister, Nirmala Sitharaman, had provided assurances that a window of opportunity will be provided for crypto and blockchain experiments.
  • The RBI may be in a position to launch its first digital currency trial program by December, current governor Shaktikanta Das told CNBC on Thursday. “We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,” Das said.