India’s Chief Economic Advisor (CEA), Anantha Nageswaran, has urged regulators not to hinder innovations in the crypto and gaming sector.
Speaking at the 2024 Global Economic Policy Forum on Wednesday, Nageswaran stressed the importance of regulatory transparency. He also advocated to strike a balance between fostering innovation and addressing social costs.
“In a country with low per-capita income and financial illiteracy, not every innovation needs to be encouraged without any questioning. You have to have a social cost-benefit analysis of innovations such as Crypto and online gaming.”
He also acknowledged the challenges posed by financial literacy in low-income nations and the need to evaluate emerging sectors.
Further, Nageswaran stressed regulators to ensure their actions are guided by clear objectives.
“Regulators must explain why a particular regulation is being introduced,” he said, adding that the proposal must contain information and goals it seeks to achieve.
Such a transparent framework would foster accountability and trust, he added.
Additionally, Nageswaran cautioned regulators to be accountable for “unelected power,” which means delegating power to independent government agencies.
“Regulators need to be cautious of their unelected powers, they need to be accountable. Transparency needs to be there with information sharing by Regulators.”
His call comes as India is battling with crypto regulations, including a 30% tax on crypto profits. However, several key crypto leaders in India hope to see a positive crypto policy framework.
Early this year, Sumit Gupta, Co-Founder of one of India’s major crypto exchanges CoinDCX, told CryptoNews that “if considered positively, [cryptos] will provide a level playing field for domestic exchanges.”
Nageswaran Calls Regulators to Distinguish Between Financial, Non-Financial Regulations
According to a PTI report, Nageswaran emphasized the need to differentiate between financial and non-financial sector related regulations. This will mitigate the excessive risk and the competition instability.
“We do need to make a distinction between regulation with respect to financial sector and regulation with respect to non-financial sector of the economy.”
He added that in the non-financial sector, market forces or competition will take care of the regulator’s actions. However, in the financial sector, regulators tend to lean towards excessive regulations.
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