In one of the most brutally honest assessments of the scene involving the cryptocurrency market in the country, PM Modi has warned Indians looking to invest in it. The warning comes off after a long discussion with various stakeholders in the matter.
PM Modi cautions against investing in crypto
On Saturday, November 13, 2021, Prime Minister Narendra Modi chaired a review meeting involving various experts from financial as well as cryptocurrency markets. The review meeting came ahead of a meeting to be held by the parliamentary committee on finance to assess the possibility of a regulatory framework involving the cryptocurrency market prevailing in the country.
According to the people aware with the minutes of the meeting, all stakeholders agreed on a strong need to stop young people from getting misled into crypto markets. The sentiments around stopping opaque advertising claiming sky-high returns were also strong in the meeting. Prime Minister Modi also raised concerns about crypto currency’s possible use for money laundering and terror financing. A source was cited by Indian Express as saying, “The PM’s meeting discussed that unregulated crypto markets cannot be allowed to become avenues for money laundering and terror financing. The Government is aware that this is an evolving technology,”
The government is planning to strike a balance between genuine and fraudulent investors
In the wake of serious concerns raised by various financial regulatory bodies, the government is working on a strategy to come out with a regulatory and legal framework around the surging cryptocurrency market in the country. Sources also said that government will adopt a progressive and forward-looking strategy. “The government is cognizant of the fact that this is an evolving technology, it will keep a close watch and take proactive steps. There was consensus also that the steps taken in this field by the government will be progressive and forward-looking,” a source quoted by Mint newspaper said.
A collective strategy involving stakeholders all around the globe is in the offing
To chalk out an effective strategy, the Government is also planning to study how cryptocurrency is regulated by various governments all around the world. Moreover, since cryptocurrency is a decentralized market, the government will also hold consultation and collaboration with global leaders in the market and devise a collective strategy. “It was also an outcome of a consultative process as RBI, Finance Ministry, Home Ministry had done an elaborate exercise on it as well as consulted experts from across the country and the world. Global examples and best practices were also looked at,” the source said.
The meeting by Prime Minister Modi should act as a guideline for the parliamentary committee meeting to be held on November 15, 2021.
Crypto- A growing snake that needs to be tamed
Cryptocurrency has been a hotbed for financial regulators all around the world. Countries like China, Indonesia, Turkey, etc have imposed a blanket ban on selling, buying, or mining cryptocurrency in the country. On the other hand, countries like El Salvador have embraced cryptocurrency and its associated blockchain technology with open arms. Various other countries like the USA and the EU have allowed cryptos with strong regulatory frameworks.
In India, RBI had imposed a complete ban on cryptocurrency in April 2018. However, the Supreme Court overturned it in 2020. Recently, there has been a lot of confusion around the issue in India. During the lockdown, India saw a huge number of new investors, exchanges booming in the market. According to an estimate, Indians have invested more than 6,00,000 crores in the crypto market. Currently, our country is estimated to be having more than 10 crore investors in cryptocurrency, the highest in the world.
The problem with regulating crypto is that it’s made to be immune to regulation
The fundamental idea behind the origin of cryptocurrency is that no government should be able to control the flow of money. The government’s deregulation was a necessity in the wake of the 2008 financial crisis, but now crypto has become a matchstick that can anytime set fire to the proverbial gunpowder called the financial market of the world.
Recently, RBI governer Shaktikant Das had also expressed his reservations around the deregulated cryptomarket. The government is also planning to bring a law with respect to the decentralized currency. It’s yet to be seen whether government recognizes it as a currency or puts it under asset class to be taxed. With so much confusion and risks prevailing in the market, it’s only natural for the Modi government to caution against the hyper-inflated crypto market.