17 JAN,2021 | MEDC
Even though perilous for the average investor, there is no doubt that cryptocurrency is a financial innovation that is here to stay. Cryptocurrencies present a plethora of risks, some of them unique to such products. Most crypto-assets are not backed by tangible securities, and thus there is an issue in accurately valuing them. This enhances the risk of market manipulation. Additionally, asymmetries of information and negotiation power creates the need to protect consumers and investors. In March 2019 the Basel Committee on Banking Supervision released a statement on crypto-assets saying that their growth could threaten financial stability. With our economy on a V-shaped recovery path, we cannot afford to have any financial destabilization at this juncture. India’s financial infrastructure is still not sophisticated enough to afford the legalization of cryptocurrencies. Policymakers need to monitor them carefully to minimize their chaotic potential. What cannot be cured, must be endured … and regulated.
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