India’s Chief Economic Advisor, Anantha Nageswaran, is urging regulators to avoid stifling innovation in the crypto and gaming sectors.
Speaking at the 2024 Global Economic Policy Forum, Nageswaran emphasized the need for a transparent regulatory framework that balances innovation with social responsibility.
Regulatory transparency is key
Nageswaran highlighted that in a country where financial literacy is low and per-capita income is modest, not every innovation should be supported without scrutiny, and he stressed the importance of conducting a social cost-benefit analysis for innovations like crypto and online gaming.
After all, we want to ensure that these developments benefit everyone, not just a select few.
He also pointed out that regulators need to have clear objectives when introducing new rules, and they must explain why a particular regulation is being introduced, he said, adding that it’s pretty important for proposals to outline their goals and the information they want to provide.
This kind of transparency can help build trust and accountability in the regulatory process.
Accountability for unelected power
Nageswaran also warned regulators about the risks associated with unelected power, which means they should be accountable for their decisions.
He believes that sharing information and being transparent is also essential for maintaining public trust.
India is grappling with crypto regulations, including a 30% tax on crypto profits, but despite this, many crypto leaders in India are hopeful for a more favorable policy framework.
Earlier this year, Sumit Gupta, co-founder of CoinDCX, one of India’s leading crypto exchanges, expressed optimism that positive regulations could level the playing field for domestic exchanges.
Clear rules for everyone
According to Nageswaran, it’squite important to distinguish between regulations for financial and non-financial sectors, and argued that this differentiation would help reduce excessive risk and instability in competition.
“We need to make a distinction between regulation concerning the financial sector and regulation regarding the non-financial sector.”
In non-financial sectors, market forces can often handle regulatory impacts, but in the financial sector, there tends to be a tendency toward over-regulation.
This nuanced approach could lead to healthier competition and innovation across various industries.
