Policy & Regulation

What India’s Finance Ministry Thinks About DeFi and Its Risks

Published

1 year ago

December 26, 2024

DCS Team

Credit : cryptonews.net

India’s Ministry of Finance acknowledged the innovation of DeFi, however warned of dangers to financial stability and client safety.
Throughout its G20 chairmanship, India labored with the IMF and FSB to handle vulnerabilities within the crypto ecosystem, together with DeFi and stablecoins.

As many international locations, together with the USA, present rising assist for cryptocurrency, India’s Ministry of Finance not too long ago mentioned its views on Decentralized Finance (DeFi), highlighting each the promise and challenges it poses. Responding to a query within the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary acknowledged the innovation of DeFi however expressed concern over its “affect on financial stability, monetary integrity and client safety.”

🇮🇳 Finance Ministry’s Response to ‘Impression of DeFi on Conventional Monetary System’ posted at this time by a Rajya Sabha MP. pic.twitter.com/6MkKTWbamq

— Kashif Raza (@simplykashif) December 25, 2024

India’s strategy to DeFi regulation and monetary literacy

The ministry highlighted international efforts throughout India’s G20 presidency to know and regulate crypto property. The Worldwide Financial Fund (IMF) and the Additional Monetary Stability Board (FSB) have collaborated on a synthesis paper outlining vulnerabilities inside “the crypto ecosystem, together with the dangers related to stablecoins and DeFi.”

Whereas India at the moment has no particular rules for DeFi, the ministry famous the significance of balancing innovation with applicable safeguards. Just lately, the Reserve Financial institution of India (RBI) additionally warned concerning the dangers related to unregulated cryptocurrencies. Nevertheless, Chaudhary identified that as international rules are nonetheless evolving, India is dedicated to discovering a balanced strategy that helps technological progress whereas addressing potential dangers.

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He additional emphasised the necessity for higher monetary literacy to make sure customers perceive the advantages and dangers of DeFi. As the worldwide regulatory panorama evolves, India is trying to develop its personal tips for DeFi sooner or later, with a give attention to training and danger mitigation.