Crypto

Anonymity is the ‘inherent risk’ of using blockchain: Treasury Secretary

Bombay: Finance Minister Nirmala Sitharaman Saturday labeled anonymity an “inherent risk” in block chain technology and called for precautionary measures to be taken in the future when the use of this technology is expanded. The finance minister has made it clear that the use of distributed ledger technology (DLT), also known as blockchain, is “absolutely mandatory” and the government also supports its use.

Minister’s remarks ahead of start of budget announcement central bank digital currency (CBDC), which is based on blockchain technology itself and is advertised as being similar to fiat currency stored in our wallets.

“…anonymity is…the unknown element in all of this. The anonymity of a person, anyone, or a robot is something we absolutely must prepare for as a future challenge,” says Sitharaman, referring to the NSDL event.

Sitharaman said DLT is a great technology to help democratize, but noted anonymity as an “inherent risk” that we need to guard against.

Calling anonymity the “powerful weightless” in the whole equation, Sitharaman said, “If we fail to protect ourselves from this anonymous element, which in itself can pose an inherent risk, we are likely to expose ourselves to far more than we ever imagined.” »

Sitharaman praised Sebi’s head of capital markets regulator Madhabi Puri Buha, who spoke to her at the same event, for “fairly warning” us about the risk of anonymity, as well as supporting DLT.

Buch said we don’t want to have anonymity in the CBDC due to be introduced in the fiscal year by banking regulator RBI.

Significant progress has been made regarding the introduction of the CBDC, according to the central bank.

Meanwhile, Sitaraman said that private crypto assets like bitcoin are “quite widespread” in India.

Buch said DLT’s strengths are transparency, real-time operation, infinite divisibility, and environmental economy.

Sitharaman said the path of retail investment has changed over the past two or three years, with the opening of a new demat account rising to 26 lakh per month in FY 22, up from 12 lakh in FY 21 and to just 4 lakh per month in FY 2020. year. .

She said retail investors act as “shock absorbers” as foreign portfolio investors come and go based on global signals.

Highlighting the $4 trillion total NSDL custodial value, Sitharaman said retail account opening briskness is a key reason for high asset values.

The event also released a postage stamp and a quilt commemorating the NSDL’s 25-year journey. Custodian also launched a program to train students in the capital markets.

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