India’s Chief Economic Advisor, V. Anantha Nageswaran, has urged regulators to encourage innovation in the cryptocurrency sector while ensuring transparency and accountability. Speaking at the Global Economic Policy Forum 2024, Nageswaran emphasized the importance of not hindering advancements in emerging technologies like crypto and Bitcoin.
Encouraging Innovation, Balancing Societal Needs
“Regulators must not stand in the way of so-called innovations in crypto and Bitcoin,” Nageswaran said. He called for a regulatory approach that supports progress without compromising societal goals, noting that financial illiteracy remains a significant challenge even in developed nations.
Nageswaran advocated for clear criteria for regulators to prevent unnecessary obstacles to innovation. “We need to ensure that the criteria set for regulators do not obstruct innovation,” he added.
Transparency as a Guiding Principle
The Chief Economic Advisor highlighted the importance of transparency, arguing that the same standards applied to financial innovations should also govern regulatory actions. “The same principles of transparency and social cost-benefit must apply to regulators themselves,” he said. By adhering to these principles and acknowledging their limitations, regulators can foster progress while safeguarding public interests.
Crypto Regulation in India: An Uncertain Landscape
Nageswaran’s comments come amid ongoing calls for regulatory clarity in India’s cryptocurrency sector. Policymakers have yet to release a definitive framework, leaving the industry uncertain about its future.
A policy paper intended to provide clarity has faced repeated delays as the government focuses on developing the digital rupee, its central bank digital currency (CBDC). Meanwhile, the Reserve Bank of India (RBI) has maintained a cautious stance, with reports suggesting it favors banning private cryptocurrencies over concerns about financial stability and investor risks.
Crypto Adoption Surges Despite Challenges
India’s crypto sector faces significant hurdles, including a steep 30% tax on crypto gains and an ambiguous regulatory environment. Despite these challenges, the country leads Chainalysis’s latest Global Crypto Adoption Index, demonstrating strong public interest in digital assets.
