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New Report From Indian Finance Ministry Looks Positive For Cryptocurrency And Blockchain

Indian Finance Ministry new report of the Steering Committee on Fintech Related Issues came out on September 2.

The Department of Economic Affairs (DEA), Ministry of Finance, on its website on September 2 updated the new report of the Steering Committee on fintech related issues. The report also covers cryptography, blockchain and digital currencies. The Finance Ministry on Monday also announced that the Steering Committee on FinTech-related issues has submitted its final report to Finance Minister Smt. Nirmala Sitharaman.

The Steering Committee was formed by the Department of Economic Affairs (DEA) under the chairmanship of Subhash Chandra Garg, who was then DEA Secretary. The 150-page report looks more positive and perceptive about issues associated with new technologies such as blockchain and cryptocurrency, with a deep view on the mechanisms surrounding them that are revolutionizing the global fintech landscape. The committee explained in its report about encryption and cryptography and what are the benefits of cryptography. Cryptography, as an instrument for fintech, has four major benefits for financial firms: (a) confidentiality, (b) privacy, (c) non-repudiation, and (d) integrity. And how cryptography forms the backbone of blockchain based systems such as Virtual Currencies. The report also described in detail about Blockchain and Distributed Ledgers Technology (DLT) and how cryptography have enabled the creation of distributed ledgers that in turn make the market in virtual currencies like Bitcoin possible.

But the committee also noted that blockchain can be used not only for cryptocurrency, but also for other areas. Some of the major fintech applications that blockchain deploys include cross-border payments, settlement of securities, trade finance and smart contracts. The report also described about digital currencies and tokens, How cryptocurrency surged in 2017 as the price of Bitcoin soared to new heights. The report also shared crypto data that 500 cryptocurrencies existed in 2014 and the number of cryptocurrencies as of September 25, 2018 is 1993. According to the report, The mechanisms surrounding cryptocurrencies are revolutionising the global fintech landscape specially Blockchain and Initial Coin Offerings (ICOs) and how they have emerged as an innovative way to raise capital.

"The issue of initial coin offerings has emerged as an innovative way of capital raising by fintech businesses. The Cryptocurrency ICO Stats for 2018 show a total number of 790 ICOs issued as on September 25, 2018. The total funds raised through ICOs amounted to USD 20 billion as of September 25th, 2018."

The report also elaborates that the regulation of cryptocurrency depends on its characteristics and purpose. Cryptocurrencies or tokens can be divided into two categories. The first category is the utility token, which is “entitle future access to a company’s product or service" and the second category is the security token, which "has the attribute of a security".

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