Cryptocurrencies are in murky waters yet again as the government has listed a bill for discussion in the winter session of Parliament, reportedly seeking to ban all private cryptocurrencies.
While some media reports said the proposed ban would encompass all private cryptocurrencies, including their mining, holding and trading, others reported that the government may treat cryptocurrencies as financial assets.
Saugata Bhattacharya, executive vice-president & chief economist, Axis Bank called crypto an alternative investment class such as oil, copper, gold, and equities, but said “…they are complex derivatives.”
Bhattacharya was speaking at Mumbai Micro Experience of FinTech Festival India 2021-22.
Mrutyunjay Mahapatra – Member of the Governing Council of RBI Innovation Hub and Board of Supervision of NABARD, Member of Insurance Advisory Council of India said “systemic risk and the psychological risk of denting the political stability and social stability because of economic instability even if it is the minutest are creating concerns in the minds of the policymakers.”
He added that the central bank’s apprehension about the digital tokens arises on the latter’s characteristics of low entry barriers, missing supervisory framework, and unchecked cross border payments. He also pointed out that the central government and RBI is supportive of innovation.
“The view of the government of India and the Reserve Bank of India is that regulations should not thwart or throttle innovation. Only thing is whether the innovation should happen in a regulated ecosystem or a federated ecosystem, which is the debate. I think the government will allow some elbow room for innovation to take place and it will be a calibrated release of the innovative and creative forces rather than making it open.”
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