In response to questions around regulation for crypto, the minister lauded the stance of the Reserve Bank of India and cited failure of crypto-currency exchanges which call for the need to regulate crypto assets
The economic impact of stimulus given in the US and the Russia-Ukraine war has made investors think of risk aversion which is leading to valuation correction but it is not causing a slowdown in the digital economy, Minister of State for Electronics and IT Rajeev Chandrasekhar said on Tuesday.
While speaking at India Digital Fest, Chandrasekhar said that online gaming rules will be notified soon but crypto is not business as usual and needs to be regulated due to the risk associated with it. When asked about his concern about the impact of funding winter on start-up ecosystem, Chandrasekhar said that stimulus given in the US during Covid and the Russia-Ukraine war have caused a certain degree of risk aversion.
"But risk, this is further exacerbated by the Silicon Valley Bank type ... that risk itself is getting moderated. People are becoming a lot more careful and prudent before making investments. Bringing in prudence and a little bit more detailed analysis before making investments, is not causing slow down of the digital economy but it certainly causing valuation correction," the minister said.
In response to questions around regulation for crypto, the minister lauded the stance of the Reserve Bank of India and cited failure of crypto-currency exchanges which call for the need to regulate crypto assets. "Certainly crypto is not an innovation. So I think there is a need for it to be regulated. Countries around the world, central banks are all trying to grapple with this problem," the minister said.
He said that in India crypto is not illegal. The minister said that cryptocurrency can be bought through the legitimate channels of LRS (Liberalised Remittance Scheme), RBI-approved dispensation on foreign exchange. "It is your choice to lose money or make money and do it in a legal manner. The government, especially our government, does not get into the business of what and what you should not invest in, but we certainly have an obligation to explain to Indian citizens that you can't exchange Rupee for crypto if you don't go through the LRS route or you violate FEMA. RBI is clear about it," Chandrasekhar said.
He said that RBI-prescribed rules are the best way to deal with crypto without creating any downside risk for India's economy. "No government in the world wants to build downside risk at a time where there's so much turbulence and uncertainty in the world," Chandrasekhar said.