Finance Minister Nirmala Sitharaman reports anonymity as an “inherent risk” in using the blockchain

Bombay: Minister of the Treasury Nirmala Sitharaman Saturday reported anonymity as an “inherent risk” in blockchain technology and called for precautions to be taken in the future with an increase in the use of this technology. The finance minister clarified that the use of distributed ledger technology (DLT), which is also called blockchain, is “absolutely imperative” and the government also supports its use.

The minister’s remarks precede the launch of the central bank’s budget announcement digital currency (CBDC) which is based on the same blockchain technology and is billed as similar to the paper currency in our wallets.

“… anonymity is what … an unknown element in this whole affair. The anonymity of the person or anyone or the robot is what we absolutely must prepare for as … a future challenge,” Sitharaman said, addressing an NSDL event here.

Sitharaman claimed that DLT is a beautiful technology that will aid in democratization, but he pointed to anonymity as an “inherent risk” from which we must protect ourselves.

Defining anonymity as a “powerful imponderable” in the whole equation, Sitharaman said, “unless we can protect ourselves from that anonymous element that can itself pose an inherent risk, we are likely to expose ourselves far more than we can. we would never have imagined. ”

Sitharaman praised head of capital markets regulator Sebi Madhabi Puri Buch, who spoke before her at the same event, for “rightfully warning us” of the risk of anonymity and also for supporting DLT.

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Buch said we do not wish to remain anonymous in the CBDC, which is expected to be introduced during the balance sheet by the banking regulator RBI.

According to the central bank, significant progress has been made in introducing the CBDC.

Meanwhile, Sitharaman said private cryptocurrency assets such as Bitcoin are “fairly well prevalent” in India.

Buch said DLT’s strengths include transparency, real-time, infinite divisibility, and being a cost-effective medium.

Sitharaman said the retail investment path has transformed over the past two to three years, with the opening of new Demat accounts increasing to 26 lakh per month in fiscal 22 from 12 lakh in fiscal 21 and only 4 lakhs per month in the fiscal year 2020.

He said retail investors act as “shock absorbers” as foreign portfolio investors have been in and out according to global cues.

Pointing out the $ 4 trillion total custody value held by NSDL, Sitharaman said the liveliness in opening the retail account is one of the main reasons for the high asset value.

A stamp and cover were also released during the event to commemorate NSDL’s 25-year journey. The depositary has also initiated a program aimed at educating college students about capital markets.

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