Fintech Crypto Logic Extension, use it as an asset, currency a challenge

Cryptotechnology 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, Minister of State for Electronics and for Computer Science Rajeev Chandrasekhar.

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.

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“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 currencies in the world and all the world’s regulators are struggling with. We find our way with caution, caution. We have a very clear target of who will do crypto in India. The government said that the 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 can have a destabilizing effect on monetary and fiscal stability.

She said that the RBI has expressed concern over the negative effects of cryptocurrencies on the Indian economy.

The RBI mentioned that cryptocurrencies are not a currency as any 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 entirely on speculation and expectations of high returns that are not well grounded, so it will have a destabilizing effect on a country’s monetary and fiscal stability.

On the other hand, 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 part of the RBI Act 1934 were made with the passage of the draft Finance Bill 2022, said Ajay Kumar Choudhary, Executive. Manager. (Fintech), RBI.

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

CBDC is a digital or virtual currency, but it cannot be compared to the private virtual currencies or cryptocurrency that have proliferated 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 operated by private companies. CBDC will be a government-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 automatically generated from a syndicated feed).

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