Cryptocurrencies have not yet passed the test of fiat currency: Chief Economic Advisor

Author: Nishu June 9, 2022

Cryptocurrencies have not yet passed the test of fiat currency: Chief Economic Advisor

Chief Economic Adviser V. Ananth Nageswaran said that cryptocurrencies may not meet basic requirements, such as having a store of value

Chief Economic Adviser V. Ananth Nageswaran said that cryptocurrencies may not meet basic requirements, such as having a store of value

Chief Economic Adviser V. Ananth Nageswaran warned on 9 June that cryptocurrencies have not yet passed the test to become fiat currency and at the same time they would be difficult to regulate.

He further added that unlike fiat money, cryptocurrencies cannot meet basic requirements such as store value, wide acceptability and units of account.

Referring to decentralized finance (DeFi), he said: “In my opinion, while it is considered innovation, I will reserve my judgment whether it is really innovative or really disruptive in a positive sense or is it something that Which we will regret.”

Mr Nageswaran said he would like to meet RBI deputy governor T. Agree with Rabi Shankar, who was saying that what now appears to be a matter of regulatory arbitration with respect to cryptocurrencies and decentralized finance, rather than a matter of real financial innovation.

As an alternative to fiat currencies, he said that cryptocurrency “has to serve a number of purposes. It must be a store of value, it must have wide acceptance and it must be a unit of account … the new crypto in all these respects.” Or ‘innovations’ like the DFI are yet to pass the test.

“So I don’t get too excited by them because sometimes we are not fully aware or understand what kind of forces we are freeing ourselves from. That’s why I like some of these fintech based disruptors like DeFi. And the reception of crypto will be protected to some extent, etc.,” Mr. Nageswaran said at an ASSOCHAM event.

9 June, 2022, 2:29 pm

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Thursday, 9th June 2022

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