Cryptocurrencies: Govt alive, aware about various issues, says DFS secretary

New Delhi: The government is alive and aware about various issues around the cryptocurrencies and will take a considered view on the issues, Financial Services Secretary Debasish Panda said on Wednesday.

Currently, regulatory bodies like RBI and Sebi do not have any legal framework to directly regulate cryptocurrencies as they are not currencies, assets, securities or commodities issued by identifiable users.

“The cryptocurrency, which has been debated day-in and day-out, has an underlying technology. In an interconnected economy, interconnected world, we cannot isolate ourselves.

“We have to bear that in mind that some way or the other is going to get us,” he said at a virtual conference organised by Institute of Directors.

Secondly, he said there are concerns from the regulatory point of view that it does not have an underlying asset so how can it be recognised a currency.

“So, there’s a dilemma here…the government is very much alive and aware about this whole issue of the cryptocurrency and its growth and its advantages and the disadvantages, everything,” he said.

Some experts are already engaged into looking at various issues as to how to deal with it and the government will be in a position to share details at an appropriate time, he added.

Cryptocurrencies are digital or virtual currencies in which encryption techniques are used to regulate the generation of their units and verify the transfer of funds, operating independently of a central bank.

“Nevertheless, I would only like to point out at this point of time that we are fully alive to what is happening around the world and how this kind of currency is gaining. A lot countries are also carefully thinking through and some countries I think have started regulating this particular issue,” he said.

Unless you regulate, he said, there are a lot of naive people who can be cheated and there could also be other fallouts for that.

Last week, Reserve Bank of India Governor Shaktikanta Das had said the apex bank has certain “major concerns” over the impact cryptocurrencies may have on the financial stability in the economy and has conveyed the same to the government.

The RBI had virtually banned cryptocurrency trading in 2018 and had directed all entities regulated by the central bank to cease dealing in virtual currencies.

Speaking on the financial sector, Panda said that overall, the banking system in the country has been quite stable despite what was earlier projected by the various rating agencies and analysts.

He expressed hope that the trend would continue, and banks and financial system in the country will be stable and robust.

He also said that the interest rate is at an all-time low, which provides a great opportunity for businesses and private investments to come in.

“Infrastructure development is something which is the top-most priority of the government, and we have a large infrastructure pipeline,” he said.

The proposed development finance institution (DFI) is soon to be in place to accelerated push to infrastructure financing activities, he said.

The Union Budget 2021-22 has proposed setting up a DFI with an initial capital of Rs 20,000 crore to mobilise Rs 111 lakh crore required for funding the ambitious National Infrastructure Pipeline (NIP).

Speaking at the virtual conference, LIC Managing Director Vipin Anand said the company is at a concluding phase of new information technology (IT) project.

“With this, speed of our operation will go as high as 10 times of what it is now. Subsequently, we would be moving to blockchain and other emerging technologies… LIC will be leader as far as IT initiative for customers and processes are concerned in next 2-3 years,” he said.

Anand said LIC has 28 crore policies with a total asset of about Rs 35.5 lakh crore. LIC commands 66.4 per cent market share in the life insurance market space.