Crypto technology as a means of payment is a logical extension of fintech companies, but the challenges lie in using it as an asset class and alternative to currency, the secretary of state for electronics and computer science Rajeev Chandrasekhar.
Speaking on the sidelines of the Fintech Festival, Chandrasekhar said that the whole world is struggling 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 world regulators are struggling. We will find our way with caution, caution. We have a very clear goal about who is going to do crypto in India. The government said RBI would encrypt the digital rupee as a first step and then we will 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 could have a destabilizing effect on monetary and fiscal stability.
She said the RBI has expressed concern about the adverse effects of cryptocurrencies on the Indian economy.
The RBI said that cryptocurrencies are not a currency, as any modern currency must 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 the Central Bank Digital Currency (CBDC) in a phased manner for the 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 changes to the relevant section of the RBI Act 1934 were made with the adoption of the draft Financing Act 2022, said Ajay Kumar Choudhary, Executive Director. (Fintech), RBI.
The passing of the bill enabled the RBI to conduct a pilot project and subsequent issuance of the CBDC.
CBDC is a digital or virtual currency, but it is not comparable to the private virtual currency or cryptocurrency that has grown over the past decade. Virtual private currencies do not represent the debt or liability of any person 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 from private companies. The CBDC will be a state-backed digital currency.
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