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Govt norms for blockchain have nothing to do with policy for cryptos: Finance Secretary

Govt norms for blockchain have nothing to do with policy for cryptos: Finance Secretary
Photo Credit: Pixabay
21 Feb, 2022
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The government’s policy for blockchain has nothing to do with its policy for virtual digital assets (VDAs), asserted Finance Secretary TV Somanathan. 

He also stated that there should not be any apprehensions regarding the use of blockchain in areas apart from payments or currencies. 

“Government’s policy towards blockchain has nothing to do with policy towards crypto assets or virtual digital assets. There need not be any apprehension whatsoever regarding the use of blockchain in an area which has nothing to do with payments or currencies,” Somanathan said at an event which was also graced by Finance Minister Nirmala Sitharaman in a post-Budget discussion with industry stalwarts. He was responding to a question on the government’s approach towards blockchain.

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Dr. Somanathan also reaffirmed that the Reserve Bank of India’s (RBI) digital currency — Central Bank Digital Currency (CBDC) — will be based on a version of blockchain technology. 

Earlier this month, while talking to ANI, the Finance Secretary had said that Bitcoin, Ethereum or NFT will never become legal tender. Crypto assets are assets whose value will be determined between two people.  

Somanathan’s comments come close on the heels of RBI Deputy Governor T. Rabi Shankar, while raising concerns over cryptocurrencies, likened them to “Ponzi Scheme” or even “worse”. He went on record stating that banning these is “perhaps the most advisable choice opens to India”. Shankar had categorically stated that “crypto-technology is underpinned by a philosophy to evade government controls.”   

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As it is not always possible to know of the persons who are the management for cryptocurrencies (e.g., bitcoin), at whom would the regulatory action be directed? If for any reason the entire system collapses what possible regulatory redressal exists for investors? These are questions with very uncomfortable implications that do not have satisfactory solutions, he said.