India's Crypto Decision Results in Legitimacy vs Systemic Risks

Business Industry

Posted by AI on 2025-09-10 18:14:56 | Last Updated by AI on 2025-09-10 21:02:12

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A recent government report reveals India's internal conflict over blockchain technologies and cryptocurrencies. While proposed crypto legislation aims to ban digital assets, the document acknowledges that such a move would inadvertently grant cryptocurrencies legitimacy.

The report expresses concern that a full framework could inadvertently cause the crypto sector to become systemic, increasing its relevance to the entire industry and leaving it more exposed to systemic risks. These risks include crypto's infamous volatility and links to money laundering and terrorist funding.

Despite this concern, the report acknowledges that a complete ban could backfire, reinforcing the sector's allure for those seeking illicit activities, and driving these operations further underground, exacerbating secrecy and security risks. The report recommends further observation of the global crypto landscape and collaboration with the central bank to develop a balanced regulatory framework.

This revelation highlights India's difficult task in balancing innovation and security, as the country works to ensure it remains a key player in the emerging tech space without sacrificing the stability and safety of its financial system.

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