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Sounding a note of caution, Chief Economic Adviser V Anantha Nageswaran has said that the cryptocurrencies have yet to pass the test to become fiat currency and at the same time it would be difficult to regulate them. He further said that unlike fiat money, cryptocurrencies cannot satisfy basic requirements such as having store value, widespread acceptability, and unit of account.

Referring to decentralized finance (Defi), he said ‘in my opinion, while it is considered innovation, I would reserve my judgment 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 about cryptocurrencies and decentralized finance rather than a case of true financial innovation.

As an alternative to fiat currencies, he said cryptocurrencies 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. He said ‘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.’