Topic: Statutory, regulatory and various quasi-judicial bodies.
3. The evolution of cryptocurrencies in India has seen a transition from scepticism to a more nuanced approach. Ongoing developments and regulatory decisions will shape the future of cryptocurrencies in India. Analyse. (250 words)
Difficulty level: Moderate
Reference: Live Mint
Why the question:
Two big things have happened in the crypto world this month: a public validation and a semi-private snub. Both of them bode poorly for its future.
Key Demand of the question:
To bring out the evolution of cryptocurrencies and the need for a regulation of the same.
Directive word:
Analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and present them in a summary.
Structure of the answer:
Introduction:
Begin by giving context.
Body:
First, write about out the evolution of cryptocurrencies – bring out the trend of major financial institutions and investors adding cryptocurrency as part of their assets and also the high accountability mechanisms associated with the blockchain technology and its applicability, scalability and security in the Banking, Finance and Insurance sectors.
Next, stress on the need for a robust and smart regulatory mechanism such as safeguards against mis-selling, Investor protection, introduction of KYC norms for crypto asset holders to avoid money laundering, clarifying the tax regime on crypto assets etc
Conclusion:
Conclude by stating that the benefits of crypto assets and blockchain technology can be reaped constructively only with a robust regulatory regime.
