Cryptocurrency: ASSOCHAM calls for extreme care
Commenting on the Reserve Bank of India's (RBI) move to explore and examine the introduction of official virtual currency in the country, apex trade association, the ASSOCHAM, cautioned that extreme care needs to be taken to ensure safety of data trail that the cryptocurrency can leave, as it changes hands through a range of electronic devices and platforms.
"Of course the inter-departmental study group of the Reserve Bank of India would examine all the safety aspects when it starts work on the exploration of the cryptocurrency which has been introduced by private parties in several parts of the world and has attracted a lot of attention. The need for safety is highlighted more by the recent and serious incidents of breach of the Facebook data of as many as 87 million users all over the world," said the chamber.
The ASSOCHAM Secretary General D S Rawat said, "though the number of users affected by the Facebook data breach is less at about half a million in India, more and more Indians are going digital. While we cannot isolate ourselves from the ever-rising number of technology platforms, each and every individual who would be using the virtual currency must be protected against fraud, data leak etc".
It goes without saying that the liability of the RBI, as is the case with the hard currency, would be clearly defined in the case of virtual currencies as well.
"Different situations of usage of the virtual currency have to be simulated," said the ASSOCHAM.
However, it must be stated that it is quite pragmatic and courageous of the RBI to initiate exploratory steps towards the world of virtual currencies.
"A high level of coordination among all the central banks would be required along setting up some kind of a global oversight to guard against misuse of the new currency by the anti-social elements, terrorists, enemy countries," the chamber said.
The burning issue of privacy which is being debated and adjudicated by the Supreme Court would also need to be examined thoroughly from legal and other angles.
Besides, the users need to be educated enough and a great amount of interface with departments like the tax authorities would be required for the launch of the new currency, as and when it happens.
"Thus, the inter-departmental committee of the RBI can even think of expanding its scope and consider the presence of even private sector experts in the areas of cybersecurity, technology platforms and defence related strategic issues," the ASSOCHAM concluded.
On April 5, after the Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) had announced reviewing the feasibility of introducing a central bank digital currency.
The Reserve Bank stated that the newly-formed committee would be submitting a report on the aforementioned matter by the end of June this year.
The central bank, however, reiterated that although technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system, Virtual Currencies (VCs), also referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity, and money laundering, among others.