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Economist Warns of Crypto to Defi Dangers Without Rules

Navigasi - India's Chief Economic Adviser V.Anantha Nageswaran warned of the dangers of crypto and the risks posed by a lack of regulation.

Economist Warns of Crypto to Defi Dangers Without Rules
Economist Warns of Crypto to Defi Dangers Without Rules

"Their more decentralization and the absence of supervisors or authorities means that there is a world of pirates and the 'winner' takes it all" in terms of being able to actually take everything from someone else," he said. 2022).

This Indian government economic adviser agrees with Deputy Governor of Central Bank of India T.Rabi Sankar on crypto and decentralized finance (defi). India's central bank officials have warned that there now appears to be a case of regulatory arbitrage with regards to crypto and defi rather than actual financial innovation.

Regarding defi, Nageswaran said that although it was considered an innovation, he questioned whether it was really innovative and really disturbing in a positive sense. "Or is it something we will regret," he said.

In addition, he also assessed that cryptocurrency as an alternative to fiat currency must also meet many conditions. “It has to be a store of value, has wide acceptance and has to be a unit of account. In all these cases, new innovations like crypto and defi have not passed the test,” he said.

"I wouldn't be too happy with them because sometimes they may not fully realize or understand the kind of power we exert ourselves," said Nageswaran.

He is also a bit wary of accepting some fintech-based disruptions, including defi and crypto. Meanwhile, the Indian government is working on a crypto policy in the country. The Ministry of Finance has been consulting with the International Monetary Fund (IMF) and the World Bank on crypto regulations.

Last week the Securities and Exchange Board of India (SEBI) said the decentralized nature of cryptocurrencies makes regulation challenging. India's central bank remains skeptical of cryptos.

Central Bank of India Governor Shaktikanta Das warned investors that crypto trading could pose a huge risk to financial stability.

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