NEW DELHI: Chief Economic Adviser V Anantha Nageswaran on Thursday said cryptocurrencies are akin to ‘a world of Caribbean pirates’ in the absence of a centralised regulatory authority and is yet to pass the test of a fiat currency.
He said government is pursuing a ‘high-wire balancing act’ to ensure that the gains in growth, inflation, rupee stability of the last four years are not frittered away.
He said the recent development in Terra-Luna cryptocurrency, which witnessed a massive meltdown last month, is a ‘very important cautionary tale’.
“I wouldn’t be very excited by them (cryptocurrency) because sometimes we may not be fully aware or comprehend the kind of forces we are unleashing ourselves. So I would be somewhat guarded in my welcome of some of these FinTech-based disruptions like Decentralised Finance (DeFI) and crypto etc,” Nageswaran said.
He further said unlike fiat money, crypto currencies cannot satisfy basic requirements such as having store value. Nageswaran said he agreed with RBI Dy Governor T Rabi Sankar who had been saying as of now there appeared to be a case of ‘regulatory arbitrage’ with regard to cryptocurrencies and decentralised finance rather than a case of true financial innovation.
“The more decentralised they become and the absence of a watchdog or a centralised regulatory authority also means that there is a world of Caribbean pirates or a world of ‘winner take all’ in terms of being able to really taking it all from somebody else,” he noted.