Chief economic adviser of India V Anantha Nageswaran on Thursday said the crypto currencies are yet to pass the test to become fiat currency and the lack of regulation it is akin to a world of Caribbean pirates underlining necessary caution in regard to some of these fintech based disruption, reported The Economic Times.
“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 takes it all’ in terms of being able to really take it all from somebody else. Also, the recent developments with respect to Luna, Terra are definitely very important cautionary tales that we need to keep in mind,” he said.
“I would be somewhat guarded in my welcome of some of these fintech-based disruptions like DeFI or decentralised finance and crypto etc,” Nageswaran said at an Assocham event.
He agreed with RBI deputy governor T Rabi Sankar who had been saying that as of now there appeared to be a case of regulatory arbitrage about crypto currencies and decentralised finance rather than a case of true financial innovation.
“While it is considered innovation, I would reserve my judgement whether it is truly innovative or truly disruptive in a positive sense or is it something that we will come to regret,” Nageswaran said.
He added that unlike fiat money, crypto currencies cannot satisfy basic requirements such as having store value, widespread acceptability and unit of account.
“I wouldn't be very excited by them because sometimes we may not be fully aware or comprehend the kind of forces, we are unleashing ourselves,” Nageswaran said.