Indian Government’s Chief Economic Adviser Warns of Danger in Crypto, Defi Without Regulation – V. Anantha Nageswaran, the Indian government’s chief economic adviser (CEA), reportedly warned about the dangers of cryptocurrency and the hazards posed by its lack of regulation at an Assocham event on Thursday.
He was cited by local media as stating about cryptocurrency:
“The more decentralized they get, and the lack of a watchdog or centralized regulating authority, the more of a world of Caribbean pirates or ‘winner take all’ in terms of being able to take everything from someone else emerges.”
On crypto and decentralized finance, the government’s economic adviser stated that he agreed with Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar. In the case of crypto and defi, the RBI official has warned that there looks to be a case of regulatory arbitrage rather than actual financial innovation.
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Nageswaran had this to say about defi:
“While it is deemed innovation, in my opinion, I would reserve judgment on whether it is actually inventive or disruptive in a positive sense, or whether it is something that we will come to regret.”
When asked if cryptocurrencies might be a viable alternative to fiat currency, the economic adviser stated that it must “serve many purposes.” “It has to be a store of value, it has to be widely accepted, and it has to be a unit of account,” he emphasized. New innovations, such as crypto or defi, have yet to pass the test in all of these circumstances.
Nageswaran came to this conclusion:
“So I wouldn’t get too excited about them because we may not always be entirely aware of or appreciate the forces we are unleashing.” “I’d be a little reluctant to accept some of these fintech-based disruptions like defi and crypto,” he said.
The Indian government is actively working on a crypto policy for the country. On crypto legislation, the finance ministry conferred with the International Monetary Fund (IMF) and the World Bank. The Securities and Exchange Board of India (SEBI) stated last week that the decentralized nature of cryptocurrency makes regulation challenging.
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Meanwhile, India’s central bank continues to be skeptical of cryptocurrency. Governor Shaktikanta Das of the Reserve Bank of India warned investors against trading in cryptocurrencies on Friday, saying they “pose tremendous risks to financial stability.”
