Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesBotsEarnCopy
India’s Finance Ministry Explores DeFi’s Impact

India’s Finance Ministry Explores DeFi’s Impact

CryptotimesCryptotimes2024/12/25 18:33
By:Dishita Malvania

This paper identifies key vulnerabilities within the crypto ecosystem, including stablecoins and DeFi.

India’s Ministry of Finance recently shared its stance on Decentralized Finance (DeFi) in response to a question in the Rajya Sabha. Minister of State (MoS) for Finance, Pankaj Chaudhary, provided insights into this emerging sector, highlighting both its potential and the challenges it poses to the country’s traditional financial system. 

While acknowledging DeFi’s innovation, the Ministry raised concerns over its risks to economic stability, financial integrity, and consumer protection. During India’s G20 Presidency, the Ministry collaborated with global institutions like the International Monetary Fund (IMF) and the Financial Stability Board (FSB) to create a Synthesis Paper on Policies for Crypto Assets. This paper identifies key vulnerabilities within the crypto ecosystem, including stablecoins and DeFi. 

🇮🇳 Finance Ministry response on 'Impact of DeFi on traditional financial system' posted by a Rajya Sabha MP today. pic.twitter.com/6MkKTWbamq

— Kashif Raza (@simplykashif) December 25, 2024

Stability Risks of Decentralised Finance, also flagged the unregulated and decentralized nature of DeFi, which can expose users to significant risks. Adding to this, the Reserve Bank of India (RBI) has frequently warned about the economic, legal, and security dangers associated with crypto assets, which currently lack regulatory oversight in India.

Minister Chaudhary laid the groundwork for regulations, highlighting the need for a balanced regulatory framework that fosters DeFi innovation while addressing associated risks. Though global guidelines from the IMF and FSB serve as a foundation, India is still developing specific regulations. 

The initial focus remains on stablecoins and unbacked cryptocurrencies, with plans to address DeFi challenges in the future. The ministry stressed the importance of financial literacy in promoting user education.

Follow The Crypto Times on Google News to Stay Updated!
0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Locked for new tokens.
APR up to 10%. Always on, always get airdrop.
Lock now!

You may also like

Crypto Market Sees Promising Gains and Opportunities for Digital Assets

In Brief The cryptocurrency market is recovering with notable gains in several digital assets. Dogecoin and Ondo show promising price increases, signaling potential market confidence. Solana and Cardano are also experiencing upward trends, attracting investor interest.

Cointurk2025/04/02 05:33
Crypto Market Sees Promising Gains and Opportunities for Digital Assets

Institutional Investors Pour Millions into Digital Assets as Market Signals Recovery

In Brief Institutional investors invested $226 million in digital assets last week. Bitcoin products saw the largest inflow, followed by a recovery in altcoins. Regional trends show significant inflows from the U.S., Switzerland, and Germany.

Cointurk2025/04/02 05:33
Institutional Investors Pour Millions into Digital Assets as Market Signals Recovery