Cryptocurrency

Consequent to the lifting of the “ban” imposed on the trade of crypto-assets by the Supreme Court of India, there has been a surge of interest in investing in crypto-assets from the general public, spurred by aggressive marketing campaigns by well-funded start-ups. In the absence of proper regulation, there is a very real danger that the public may be mis-sold this product with harm to the wider economy.

As a cricket lover who tuned into the recent ICC World T20 broadcast from the United Arab Emirates, as absorbing as the on-field action was, I noticed something disconcerting in the breaks between the covers. A large number of advertisements had been placed by start-ups working in the “cryptocurrency” space. Some promise ease of investment (for as little as `100), some promise returns of four-times regular fixed deposits, while the default appeal seems to be of the opportunity to make life-changing amounts of money at the click of a mouse.

To anyone who has followed the world of finance, all of this sounds scarily familiar. More so in the Indian context where the lack of financial education and the absence of access to regulated financial products have resulted in a series of Ponzi schemes, and speculative bubbles have resulted in the destruction of household wealth. When the cryptocurrency industry bodies claim that Indian citizens have put in more than `6 lakh crore into cryptocurrencies (Economic Times 2021), it is a source of worry when one realises that the entire sector is effectively unregulated at the present time with little or no oversight on what happens to investors’ wealth.