Favoring blockchain applications and keeping a tough posture against cryptocurrencies seems to be the official position of the Indian government.
On Saturday, National Securities Depository Limited (NSDL) launched a blockchain-based distributed ledger technology (DLT) platform for Security and Debenture Covenant Monitoring, where the Indian Finance Minister and capital market regulators termed the anonymity feature of blockchain technology a risk.
Indian Finance Minister Nirmala Sitharaman who was present at the silver jubilee celebrations of NSDL, where the DLT platform and an investors’ education program were launched, agreed that blockchain technology has emerged as “absolutely imperative” but also said that its anonymity factor is an area of concern. She asked the regulators and other stakeholders to take precautions against these “inherent risks”, especially when blockchain technology witnesses widespread adoption.
“The anonymity is what … one unknown element in this whole thing. The anonymity of the person or whoever or the robot is the one which we have to be absolutely readying ourselves as … a future challenge,” Sitharaman said.
She also said that the upcoming CBDC will not have the anonymity element.
Capital Markets Regulator Also Voices Concerns
Speaking on the occasion, the chairperson of the Securities Exchange Board of India (SEBI), the capital markets regulator, Madhabi Puri Buch said, “Today, we have noticed that in respect of market, securities, investment, and payments, people are increasingly placing their trust in distributed ledger technology.”
She explained the benefits of blockchain-powered NSDL securities and covenant monitoring systems, saying it will bring discipline and transparency to the corporate bonds market through real-time recording and verification of information.
However, she flagged concerns about the anonymity feature of the DLT technology in what she referred to as “private” blockchain networks. “This (anonymity) is the single biggest differentiator between private DLT manifestations and what we commonly refer to as Central Bank Digital Currencies where it is not envisaged that this aspect of the technology would… be put to use as we don’t wish to have anonymity,” she said.
Sitharaman Pitches for Global Consensus
Speaking after the SEBI chairperson, the Indian finance minister further highlighted the perceived risks of governments and central banks not having the power to monitor or scrutinize everything that happens within a blockchain network.
Earlier, the Indian Finance Minister had said that blockchain is good and has a lot of potential but the government will not rush to a decision on the adoption or regularization of cryptocurrencies. Speaking at an IMF panel discussion last month, she called for international cooperation for a uniform framework to deal with the challenges that the emerging blockchain technology poses to the governments.
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