Crypto Opportunity

The Indian Express     18th November 2021     Save    

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.

==========================================================================================