Cryptocurrency is a bogey that Indian govt needs to ban, not regulate: K Yatish Rajawat

(K Yatish Rajawat is the CEO of Centre for Innovation in Public Policy. The column first appeared in New18 on November 22, 2021)

 

  • When it comes to preventing scrutiny, the trick of the trade is to seek regulations. This counterintuitive strategy is being adopted by lobbyists of crypto tokens in the country who are coming under increasing pressure from the government, the Reserve Bank of India and the Ministry of Finance. Industry bodies that support this strategy need to be careful as such a compromise can only harm the fintech ecosystem and the larger economy. The government has to look beyond this bogey of regulations and ban the crypto assets and companies selling it. Several industry bodies such as Nasscom, IAMAI and IndiaTech along with crypto-exchanges in the country are asking that crypto products should not be banned but regulated. Their long-standing “rationale” has not changed: that if India bans crypto it will fall behind the technology curve and the country will lose out on the innovation cycle. This is a bogey that needs to be demolished. First of all, crypto tokens as an investment or masquerading as a currency and crypto exchanges facilitating this investment are not technology — they are merely products based on a common concept, blockchain — even if they using different hashing technologies for encryption. The technology or the algorithms that are used for encryption are already being used by various entities. For instance, Bitcoin uses the SHA 56 algorithm while Ethereum uses Keccak 256 – these are the largest two crypto tokens. I am consciously not using the word “currency” as I have said in my earlier write-ups that they are not currencies…

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