Crypto technology as a means of payment is a logical extension of fintech companies, but challenges lie in using it as an asset class and alternative to currency, said Minister of State for Electronics and Finance computing Rajeev Chandrasekhar said Thursday.
Speaking on the sidelines of the Fintech Festival, Chandrasekhar said the whole world is grappling with the crypto problem and needs to agree on 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 with which all currencies in the world and all Regulators of the world are struggling We will find our way carefully, cautiously We have a very clear target as to who will do crypto in India The government has said that RBI will do digital rupee crypto as a first step, then we’ll see how the market develops,” Chandrasekhar said.
Finance Minister Nirmala Sitharaman said the RBI has raised concerns about cryptocurrencies, noting that they should be banned as they can have a destabilizing effect on monetary and fiscal stability.
She said the RBI has expressed concern over the adverse effects of cryptocurrencies on the Indian economy.
The RBI mentioned that cryptocurrencies are not a currency as every modern currency has to be issued by the central bank or the government, she said.
Further, she said, the value of fiat currencies is anchored by monetary policy and their status as legal tender. However, the value of cryptocurrencies is based solely on speculation and expectations of high returns that are not well anchored, so it will have a destabilizing effect on a country’s monetary and fiscal stability.
On the other hand, the Reserve Bank of India is implementing Central Bank Digital Currency (CBDC) in a phased manner for wholesale and retail segments.
The introduction of the CBDC was announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman and the necessary amendments to the relevant section of the RBI Act 1934 were made with the passage of the draft Finance Bill 2022, said Ajay Kumar Choudhary, Executive Director. (Fintech), RBI.
The passage of the bill allowed the RBI to conduct a pilot project and the subsequent issuance of the CBDC.
CBDC is a digital or virtual currency but it is not comparable to private virtual currencies or cryptocurrency which have increased over the past decade. Private virtual currencies do not represent any person’s debt or liability because there is no issuer.
India’s official digital currency is expected to debut in early 2023, mirroring one of the currently available e-wallets run by private companies. The CBDC will be a state-backed digital currency.
(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)