Sounding a note of caution, Chief Economic Adviser V Anantha Nageswaran said on Thursday that the crypto currencies have yet to pass the test to become fiat currency and at the same time it would be difficult to regulate them.
He further said that unlike fiat money, crypto currencies cannot satisfy basic requirements such as having store value, widespread acceptability and unit of account.
Referring to decentralised finance (DeFI), he said: “In my opinion, while it is considered innovation, I would reserve my judgement whether it is truly innovative or truly disruptive in a positive sense or is it something that we will come to regret.”
Nageswaran said that he agreed with RBI Deputy Governor T Rabi Sankar who had been saying that as of now there appeared to be a case of regulatory arbitrage with regard to cryptocurrencies and decentralised finance rather than a case of true financial innovation.
As an alternative to fiat currencies, he said cryptocurrencies have “to satisfy many purposes. It has to be a store of value, it has to have widespread acceptability and it has to be a unit of account…In all these cases the new ‘innovations’ such as crypto or DeFI are yet to pass the test.
“So I wouldn’t be very excited by them because sometimes we may not be fully aware or comprehend the kind of forces we are unleashing ourselves. So I would be somewhat guarded in my welcome of some of these FinTech based disruptions like DeFI and crypto etc,” Nageswaran said at an Assocham event.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.