The #government and financial regulators are considering imposing higher restrictions, including a complete ban on private #cryptocurrencies.
The government will promote a central bank digital currency (CBDC) as an innovative and cost-effective payment solution but it may not put to rest the Reserve Bank of India’s concerns regarding private cryptocurrency, such as risks to macroeconomic stability, by allowing any private crypto asset as a legal tender, two officials said.
A synthesis paper of the International Monetary Fund and Financial Stability Board highlighted these risks to the G20 nations in September and proposed a minimum threshold for regulation, they said, requesting anonymity.
“The paper doesn’t stop any country from imposing higher restrictions, as stringent as a complete ban,” one of them said. “The government and financial sector regulators, including the Reserve Bank, are seized with the matter.”
Compared to a cryptocurrency, a CBDC is more eco-friendly as energy requirement of a digital currency depends on its underlying technological stack, the other person said. “CBDCs could be based on algorithm-driven processes as against energy-intensive mining of #crypto assets,” he said.
Underscoring the adverse impact of a cryptocurrency on the environment, he said that people mine to create a private cryptocurrency, but no such process is required for CBDC. Either a sovereign or a central bank can issue CBDCs by converting the bank’s existing balances to CBDC balances, he added.
The Reserve Bank has launched a digital rupee that would revolutionise the financial technology sector by creating new opportunities and lessening the burn in handling, printing and logistics management of cash. This is one more instrument to catalyse India’s fast emerging digital economy, he said.
A cryptocurrency is neither a commodity nor has any claim on commodities as they have no intrinsic value. “They are designed to bypass the established and regulated intermediation and control arrangements crucial for ensuring integrity and stability of monetary and financial ecosystem,” the first official said.
“Both #innovation and benefits of virtual money is provided by CBDCs, while ensuring consumer protection and avoiding any threat to social and economic consequences of private virtual currencies,” he said. Due to its inherently cryptic nature, crypto assets are being used for terror funding, money laundering and tax evasion.
Central bank governor Shaktikanta Das recently said a #cryptocurrency is a “serious threat to financial stability” for all countries, especially for emerging economies, which was recognised in the synthesis paper as well.
“Everybody understands and agrees that there are serious risks, and that risk has to be looked at and managed very carefully,” Das said at an event on October 31.
The issue of cryptocurrency has to be dealt with properly, he said. “I have only one question to believers of regulation to ask, how will you regulate it? Whom will you regulate and regulate what? Before you think of regulating it, let us first understand what is this cryptocurrency. Is it a financial product? Is it an asset? If it is an asset, what is the underlying? It is not a tangible thing. What is the definition of cryptocurrency? Till now, I have yet to see a credible definition of what a cryptocurrency is,” he said.
“I have yet to come across what you call any sort of credible explanation of the larger purpose that cryptocurrencies serve. The third point which comes to my mind, and which is very important, what cryptocurrencies will do for international transactions or domestic transactions, whatever you call it in the digital mode, which CBDCs cannot do. The fourth and final point is the basic question. It is a kind of a new currency system developing,” he said.
“Are governments and central banks across the world comfortable with private currency vis-à-vis a fiat currency, a currency issued by a central bank on behalf of the sovereign? These are the four fundamental issues which need to be first understood before we talk of any kind of regulation, and these are very well recognised by the IMF-FSB Synthesis Paper,” he added.
The leadership of the G20 has welcomed the synthesis paper because it is a good beginning to understand what the risks are and possible ways to deal with them. “We are not trying to stifle innovation. All innovation, which is in the overall public interest, must be supported and promoted. We are not against innovation, but innovation should serve a public purpose,” Das said.

Does Prince Charles’ coronation as the new king of England affect Web3 adoption?

By now, you already know that Web3 operates on the basis of decentralization. However, the pace of adoption of #Web3 technologies can be influenced by some leaderships.

The King Could Be Good for Web3

Prince Charles has been known to be an advocate for environmental sustainability, and he has spoken about the importance of taking action on climate change.

Some Web3 technologies, such as blockchain-based systems for carbon credits and sustainable supply chain management, could potentially align with Prince Charles' environmental values.

If the new king of England is supportive of blockchain technology and decentralized systems, there could be increased government investment in research and development of Web3 technologies. This could lead to the creation of more favorable regulations for Web3 projects and increased adoption of blockchain-based platforms in the UK and other regions.

Could Be Anything Else for Web3

There is no publicly available information that specifically states whether Prince Charles of England supports Web3 or not.

As a member of the British royal family, Prince Charles typically refrains from making political or economic statements that could be perceived as favoring one particular technology or business.

On the other hand, if the new monarch is less supportive of decentralized systems, there could be more restrictions and regulations placed on Web3 projects, which could hinder their growth and development.

Additionally, political instability caused by the coronation could affect the overall economic environment, which could indirectly impact the Web3 ecosystem as well.

In Conclusion

It is important to note that the royal family's position on Web3 technologies is not a significant factor in the development or adoption of these technologies.

Web3 is a decentralized ecosystem that operates independently of any particular #government or institution, and its success will depend on its ability to provide value and solve real-world problems for users and businesses around the world.

This is why I continue to urge African Web3 developers to build with a problem in mind, not build only because they want to be associated with Web3 or the blockchain ecosystem.

We need valuable solutions that will best Web2 offerings and as we get these into the market, marketing will become easier and adoption will easily follow.