A recent report by the United Nations (UN) stated that over seven percent of India’s population own digital currencies. Digital currencies are often cited as a tool for financial inclusion which has the potential to change global financial infrastructure. The adoption of digital currencies have increased challenges in terms of the need to balance accountability, privacy and transparency. “Till date, about 46,000 people have reported cyber frauds pertaining to this domain. Users can enable two-factor authentication on all wallets. Meanwhile, businesses can practice vigilance against such threats through application of security measures and maintenance of blockchain records. Protection of networks through set up of firewalls and encryption of information will minimise the risk of cyber criminals, who intend to gain access to confidential information,” Vikram R Singh, founder and CEO, Antier, a blockchain development and consultancy company, told FE Digital Currency.
As per industry experts, privacy is a big area of concern and the world is in need of global cryptocurrency regulations. This is to eliminate the scope for regulatory arbitrage. “Such legislations will help especially those which targets financial crimes. Indian government seeks to explore the idea of a national digital currency, and its integration within the governance. If digital currencies owned by central banks are authorised, central banks will be able to watch over and control every transaction. Introduction of central bank digital currency (CBDC) is expected to bring transparency in the industry,” Punit Agarwal, founder, KoinX, said.
Furthermore, as virtual assets are stored in decentralised ledgers, there are chances of execution of unauthorised trades which doesn’t come under any regulatory framework. “The central had government announced to launch its digital currency (CBDC) soon but there have not been more updates on the same,” Dileep Seinberg, founder, CEO, MuffinPay, a bill payment, and utility cryptocurrency company, said. Moreover, market regulators believe that further information is required to determine whether or not virtual currencies can be formally classified as securities. “Even SEBI indicated that an objective of bringing cryptocurrency trading platforms under regulatory oversight might be to offer Know Your Customer (KYC) mechanism; the same can be secured by registration of businesses as money changers and authorised dealers,” Singh added.
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