Referring to the recent Luna crypto crash, the Chief Economic Adviser said it’s a 'very important cautionary tale'
V Anantha Nageswaran also said that cryptocurrencies are yet to pass the test of a fiat currency
Nageswaran said he would be guarded in welcoming some of the fintech-based disruptions like decentralised finance (DeFi) and cryptocurrencies
Drawing a parallel between cryptocurrencies and malicious activities, V Anantha Nageswaran, the Chief Economic Adviser to the Union government, on Thursday (June 9) said that cryptocurrencies are similar to ‘a world of Caribbean pirates’ in the absence of a watchdog or a centralised regulatory authority.
In the absence of regulations, it is a world of ‘winner take all’ where cryptos are able to truly take it all from somebody else, Nageswarana added.
Referring to the recent Luna crypto crash, which wiped out investments of about 2.3 Lakh Indians, he said it’s a ‘very important cautionary tale’, news agency PTI reported.
“I wouldn’t be very excited by them (crypto) because sometimes we may not be fully aware or comprehend the kind of forces we are unleashing ourselves,” Nageswaran was quoted as saying. “So I would be somewhat guarded in my welcome of some of these fintech-based disruptions like DeFi and crypto etc.”
He also added that cryptocurrencies are yet to pass the test of a fiat currency. Unlike fiat money, cryptocurrencies don’t satisfy the requirements like having a store value, a unit of account or widespread acceptability, he said.
The statement comes at a time when there is uncertainty about how cryptocurrencies will be treated in the country. While the Centre has not made its stance clear yet, officials of the Reserve Bank of India (RBI) have made the central bank’s opposition to private virtual currencies quite clear.
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Meanwhile, the RBI plans to launch a Central Bank Digital Currency (CBDC) in the current fiscal year. However, the central bank, in its annual report, said that it proposes to adopt a graded approach in introducing the CBDC.
RBI Deputy Governor T Rabi Sankar last week said that CBDCs could ‘kill’ the reason for private cryptocurrencies to exist.
Amidst all these, the government has announced a 30% tax on gains made from virtual digital assets (VDAs), including cryptocurrency, while there are also reports that the Goods and Service Tax (GST) Council is likely to consider levying 28% tax on cryptocurrencies.
Recently, Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das also voiced their opinions against cryptocurrencies. Sitharaman called for global regulations for cryptocurrencies, which she said can be used for money laundering and terror financing.
Amid the crypto market crash, Das last month said, “We have been cautioning against crypto and look at what has happened to the crypto market now. Had we been regulating it already, then people would have raised questions about what happened to regulations.”
This once again raised questions about how far cryptos can be regulated.
Meanwhile, Union Minister of IT and Entrepreneurship Rajeev Chandrasekhar recently, responding to a question about strict regulations for cryptocurrencies hampering India’s futuristic vision of technology, said that the government’s policies would not cause any damage and there are no restrictions on innovation on the blockchain.
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