dr Daleep Pandita
With the vigorous crypto market of more than $2 trillion, cryptocurrency is fast becoming a fast growing parallel economy in the world. Transacted across 5000+ meme coins, this virtual form of currency with no physical form is not redeemable, nor is it subject to any regulatory authority control. This crypto market has not experienced much volatility as can be seen in the stock markets which have gained the confidence of investors to become the main reason to invest in this hidden market without fear of losing money on this platform. At present, due to its safe and convenient means of financial transitions around the world, this virtual currency has become an integral part of the international economy, ultimately becoming a reliable tool for investment diversification.
Because of how it works and works, this growing crypto investment trend is not only dangerous for any financial system, but poses a variety of serious threats to our national economy and seeks to destabilize the security of India. While it is not legal tender in our country like flat money, it was the requirement of our financial system to critically analyze the pros and cons of this form of currency before introducing it into our economic system.
Mainly due to its fundamental and inherent threats, this risky cryptocurrency business due to its hidden transitions in the absence of the control of any regulator ultimately leads to financial instability and economic crises due to the increase in financial fraud and the promotion of white-collar crime during these operations. It leads to misuse and misappropriation of funds at both the micro and macro levels of operations. Cryptocurrency is the main reason behind the promotion of money laundering, which has multiple impacts on financial stability and due to its operations, it is against all norms and foreign exchange principles. This type of uncontrollable financial transactions evades both direct and indirect taxes that affect government revenues, resulting in heavy losses to the treasury. The undetectable transactions made by crypto exchanges drastically lower the value of operating currencies and bankrupt nations as a whole.
Aside from posing serious external and internal threats to our country’s security, cryptocurrency in India mainly creates safe havens for promoting corruption at the national level in general and helps support terrorism in our Union Territory in particular. Now, hidden cryptocurrency transactions have proven to be a safe way to indulge in the heavy and mass form of give and take at the highest levels of our society. Recently, money traders across our borders involved in promoting terrorism have adopted this new technique to use unnoticed cryptocurrency exchanges to lure youth and support terrorist activities, particularly in Jammu and Kashmir.
This illicit financial trend cannot simply be ignored by the guidelines issued by our financial regulator, the Reserve Bank of India, but requires the immediate attention of the government of the day. Faced with such dangerous consequences, even countries like China, Turkey, Gulf States and some of the European countries have already banned cryptocurrencies in their economies. There are lessons to be learned from the experiences of these countries, which can be of enormous help in bringing out legislation with enough bite to contain this fast-growing economic threat, and thereby also send a strong message to the unauthorized lobby of hidden investors who were risking it and dangerous promote cryptocurrency business in India.
(Author is Former Regional Manager at the Government of India PSU)