Chief Economic Adviser (CEA) Anantha Nageswaran on Thursday said cryptocurrencies are similar to 'a world of Caribbean pirates' in the absence of a centralised regulatory authority and are yet to pass the test of a fiat currency.
He said that the government is doing a "high-wire balancing act" to guarantee that the recent four years' gains in growth, inflation, and rupee stability are not squandered. He believes the recent events in the Terra-Luna cryptocurrency, which experienced a huge crash last month, are a "very important cautionary tale." "I wouldn't get too enthused about them (cryptocurrency) since we may not always be aware of or comprehend the forces we are unleashing. So I would be a little hesitant to embrace some of these FinTech-based disruptions like Decentralised Finance (DeFI) and crypto etc," Nageswaran said.
He went on to say that, unlike fiat money, cryptocurrencies lack basic characteristics such as storage value, general acceptability, and unit of account. "The more decentralised they get, and the lack of a watchdog or a centralised regulating authority also means that there is a world of Caribbean pirates or a world of 'winners take all' in terms of being able to grab everything from someone else," he said. The government is putting together a consultation paper on cryptocurrencies and is soliciting opinion from a various individuals and organisations.
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