Dr. Daleep Pandita
With the hefty cryptomarket of more than $ 2 trillion, cryptocurrency is rapidly becoming fast growing parallel economies in the world . This virtual form of currency devoid of any physical form which is transacted through more than 5000 meme coins is neither redeemable nor have any control of the regulator. This cryptomarket has not witnessed much volatility as seen in the share markets that has earned the trust and confidence of investors to become the main reason of investment in this hidden market without fear of losing money on this platform. Currently this virtual currency has evolved as an integral part of international economy due to its secure and comfortable means of financial transitions all across the globe and has ultimately emerged as a dependable tool of diversification for investment.
Due to its functioning and mode of operation, this growing trend of crypto investment is not only dangerous for any financial system but is posing variety of serious threats to our national economy thereby trying to destabilise safety and security of India. Although it is not a legal tender like that of a flat money in our country, but it has been the demand of our financial system to critically analyse the pros and cons of this form of currency before introducing it in to our economic system.
Primarily due to its basic and inherent threats attached to it this risky cryptocurrency business due to is hidden transitions in absence of the control of any regulator ultimately result into financial instability and economic crises due to increase in financial frauds and promotion of economic crimes during these operations. It creates improper utilization and misappropriation of funds both at micro and macro level of operations. Cryptocurrency is the main reason of promoting money laundering that have multiple effects on financial stability and violates all norms and foreign exchange principles by virtue of its operations. This type of uncontrollable financial transactions evade both direct and indirect taxations affecting government revenue resulting into heavy losses to the government exchequer. The unaccountable transactions through crypto exchanges drastically bring down the value of operating currencies bankrupting the nations as a whole.
Besides posing serious external and internal threats to the safety and security of our country, cryptocurrency in India is mainly creating safe havens for promoting corruption at national level in general and helping in abetting terrorism in our Union Territory in particular. Now hidden transactions under the ambit of cryptocurrency has proved safe method for indulging in to heavy and bulk give and take form of corruption at highest levels of our society. Of late money handlers across our borders engaged in promoting terrorism has adopted this new technique of using unnoticeable cryptocurrency exchanges in luring youth and abetting terrorist activities particularly in Jammu and Kashmir.
This unlawful financial trend can not be ignored merely by the directives issued by our financial regulator, Reserve Bank of India but warrants immediate attention of government of the day. Realising such dangerous consequences, even countries like China, Turkey, Gulf Nations and some of the European countries have already banned cryptocurrency in their economy. Lessons need to be drawn from the experiences of these countries which can be of immense assistance in bringing out the legislation with adequate teeth for curbing this fast growing economic menace thereby also sending a strong message to the unauthorized lobby of hidden investors promoting this risky and dangerous crytocurrency business in India.
(Author is former Regional Manager with Government of India PSU)