Referring to decentralised finance (DeFI), he said: “In my opinion, while it is considered innovation, I would reserve my judgement whether it is truly innovative or truly disruptive in a positive sense or is it something that we will come to regret.”
Nageswaran said that he agreed with RBI Deputy Governor T Rabi Sankar who had been saying that as of now there appeared to be a case of regulatory arbitrage with regard to cryptocurrencies and decentralised finance rather than a case of true financial innovation.
As an alternative to fiat currencies, he said crypto currencies have “to satisfy many purposes. It has to be a store of value, it has to have widespread acceptability and it has to be a unit of account…In all these cases the new ‘innovations’ such as crypto or DeFI are yet to pass the test.
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“So I wouldn’t be very excited by them because sometimes we may not be fully aware or comprehend the kind of forces we are unleashing ourselves. So I would be somewhat guarded in my welcome of some of these FinTech based disruptions like DeFI and crypto etc,” Nageswaran said at an Assocham event.
