Finance Minister Nirmala Sitharaman today expressed the concern of the government for the anonymity factor, which she said was an “inherent risk” in blockchain technology and called for taking adequate precaution in the future with a rise in the use of bitcoins.
The finance minister made it clear that using the distributed ledger technology (DLT), also known as the blockchain, was “absolutely imperative” and the government also supported the use of the same.
The minister’s remarks appear ahead of the launch of the budgetary announcement of central bank digital currency (CBDC) based on blockchain technology and are being seen as similar to the paper currency carried in our wallets.
“The anonymity is what? One unknown element in this whole thing. The anonymity of the person or whoever or the robot is the one which we have to be absolutely readying ourselves as… a future challenge,” Sitharaman said, addressing an NSDL event in Mumbai.
The finance minister said the DLT was a beautiful technology that would help in democratisation but flagged anonymity as an “inherent risk” that the country needed to guard against.
Terming anonymity as a “powerful imponderable” in the whole equation, Sitharaman said, “unless we are able to guard ourselves against that anonymous element which can itself pose an inherent risk, we probably will be exposing ourselves much more than ever we would have imagined.”
Sitharaman commended capital markets regulator Securities and Exchange Board of India (SEBI) chief Madhabi Puri Buch, who spoke before her at the event, for “rightly warning” us about the risk of anonymity, and also for advocating DLTs.
Buch said, “We do not wish to have anonymity in the CBDC, which is supposed to be introduced during the fiscal by banking regulator RBI.”
According to the Reserve Bank of India, considerable progress has been made in the introduction of the CBDC.
Meanwhile, the finance minister said private cryptocurrency assets like Bitcoins were “fairly well spread” in India.
Buch said the strengths of DLTs included transparency, real-time monitoring, infinite divisibility and a cost-effective means.