Regulating Cryptos – It is time for India to adopt a rational policy towards Cryptos

download 49 Regulating Cryptos   It is time for India to adopt a rational policy towards Cryptos

The centre has announced that among the 26 bills that will be taken up for a debate this winter session, the Crypto bill will be one of them. India needs to adopt a more rational approach keeping in mind the emerging realities.

Cryptos worth over $2 trillion

Today if you look at the crypto market, Bitcoin has a market cap of $1.1 trillion followed by Ethereum at $500 billion. If you add up other cryptos like Binance, Tether and Dogecoin, the total market cap of Cryptos is well above $2 trillion. In short, cryptos are an idea whose time has come. There is increasing level of acceptance with more and more online channels accepting cryptos as a form of digital currency. Hence a framework for regulation is better than outright ban.

It is all about fiat currencies

As a product, cryptos are just about 13 years old and began after the sub-prime crisis. In the aftermath of the crisis, the central banks across the world infused trillions of dollars of paper money into the system. This virtually debased most of the currencies since unlimited amount of currencies can be printed by fiat. That is where cryptos became valuable as their creation is limited due to the conditions being extremely stringent. This scarcity is what makes cryptos valuable. That is a global reality and there are scores of Indian investors who also actively trade cryptos online.

Regulation is a must

While a ban does not make much sense, the government must surely look to regulate the orderly growth of cryptos. For example, the platforms offering such cryptos must be regulated with basic requirements with respect to recognized exchanges, registration of members, KYC norms etc. The government is also keen to regulate the advertising and the promotion of cryptos in India, specially the use of high-profile persons as the brand ambassadors. What is really commendable is that government wants to increasingly look at implementation of blockchain as an underlying technology for indelible record keeping. What about the proposed RBI digital currency?

RBI digital currency

There are some practical anomalies. Firstly, the RBI digital currency is not exactly a crypto, but a digital alternative to cash. For example, it’s hard to fathom how the RBI can print currency by fiat and also have a crypto that is not by fiat. Clearly, what the RBI is offering is not a cryptocurrency but just digital cash. The bigger issue that RBI and all the other central banks across the world need to consider is how long can they just continue to print money. That has to end at some point. Cryptos did not emerge out of thin air. They emerged because of the perils of fiat currency. T

Will RBI bother to consider this while designing cryptocurrency regulation?
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