crypto: Cryptological expansion of fintech, its use as an asset, currency a challenge: MoS IT

Cryptotechnology as a means of payment is a logical extension of fintech companies, but the challenges lie in its use as an asset class and an alternative to currency, Minister of State for Electronics and IT Rajeev Chandrasekhar said on Thursday. Speaking on the sidelines of the Fintech Festival, Chandrasekhar said the entire world is grappling with the issue of crypto and needs to come to an understanding of ways and means to solve it.

“Crypto as a means of payment is a logical extension of fintech, but crypto as an asset class and crypto as a substitute for currency is an area that all the world’s currencies and all the world’s regulators are struggling with. We will find the way. with caution, caution. We have a very clear targets on who will do crypto in India. The government has said that the RBI will make crypto-encryption of the digital rupee the first target and then we will see how the market develops,” Chandrasekhar said.

Finance Minister Nirmala Sitharaman has said that the RBI has expressed concern over cryptocurrencies and noted that they should be banned as they can have a destabilizing effect on monetary and fiscal stability.

She said the RBI had registered its concern over the negative impact of cryptocurrencies on the Indian economy.

The RBI mentioned that cryptocurrencies are not a currency because every modern currency has to be issued by the central bank or the government, she said.

Furthermore, she said, the value of fiat currencies is anchored by monetary policy and their status as legal tender. However, the value of cryptocurrencies rests solely on speculation and expectations of high returns that are not well grounded, so it will have a destabilizing effect on the monetary and fiscal stability of a country.

On the other hand, the Reserve Bank of India is in the process of implementing the Central Bank Digital Currency (CBDC) in a phased manner for the wholesale and retail segments.

The introduction of CBDC was announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman and necessary amendments to the relevant section of the RBI Act, 1934 have been made with the passage of the Finance Act 2022, said Ajay Kumar Choudhary, Managing Director (Fintech), RBI.

The passage of the bill has enabled the RBI to conduct a pilot and subsequent issuance of CBDC.

CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies or cryptocurrency that have emerged in the last decade. Private virtual currencies do not represent any person’s debt or obligations since there is no issuer.

India’s official digital currency is likely to debut in early 2023, mirroring some of the currently available private company-run electronic wallets. CBDC will be a government-backed digital currency.