Crypto Opportunity

Context: Government must identify the risks & frame a regulatory framework for cryptocurrencies that addresses them.

Issues associated with Cryptocurrency

• Serious concerns on macro-economic and financial stability.
• Restrictions on cryptocurrency may end up having the opposite effect, pushing them beyond the realm of scrutiny and making it harder to enforce the law in case of felony.
• No uniformity in the regulatory approach globally towards cryptocurrencies: Countries are grappling with questions over the appropriate regulatory framework, and are opting for different approaches. 
  • In India, the RBI had barred all banks from dealing in cryptocurrencies in 2018 but this was struck down by the Supreme Court in 2020.
• Legitimate concerns over cryptocurrencies: No underlying asset and benchmark to assess their values. 
  • Extremely volatile in nature; 
  • Dramatic rise in investor interest in such currencies — non-fungible tokens. 
• Issues of money laundering and financing of terrorism.

Way Forward

• Cryptocurrency should be “progressive and forward looking”.
• Concerns over investor protection need to be addressed.
• Need to be cautioned about cryptocurrencies and the volatility associated with them.
• Need to be grappled with Money-laundering and financing terrorism.
• Regulatory framework needs to be urgently framed.
• Apparatus will need to deal with myriad aspects of cryptocurrencies. 
• Government must need to identify the associated risks, and create the regulatory architecture.

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