FM Nirmala Sitharaman warns of anonymity as an ‘inherent risk’ in use of blockchain

Finance Minister Nirmala Sitharaman flagged anonymity as an ‘inherent risk’ in blockchain technology and warned for future increase in the use of technology.

FM Nirmala Sitharaman addressing a NSDL event on Saturday. At the budgetary announcement of the central bank digital currency(CBDC) said. “The anonymity is… one unknown element in this whole thing. The anonymity of the person or whoever. Or the robot is the one which we have to be absolutely readying ourselves [for] as … a future challenge”.

The minister has made very clear about her thoughts on using distributed ledger technology(DLT) ‘absolutely imperative’ and the government had supported  for the same.

She added DLT was a ‘beautiful’ technology that would help in democratisation but flagged anonymity as an ‘inherent risk’ that “we need to guard ourselves from”.

She applauded SEBI chief Madhabi Puri Buch, who spoke at the same event, for “rightly warning us” about the risk of involvement in blockchain and also for advocating DLTs.

Ms. Buch said the strengths of DLTs included real time information, infinite divisibility, transparency and it being a cost-effective medium.

Terming anonymity as a ‘powerful imponderable’ in the whole equation, Ms. Sitharaman said. “Unless we are able to guard ourselves against that anonymous element. Which can itself pose an inherent risk. We probably will be exposing ourselves much more than ever we would have imagined.”

She presented figures for the number of increases. In retail investors new demat account opening over 26lakhs per month in FY22 from 12 lakhs in FY21.

She further added retail investors are the shock absorbers in market. When foreign portfolio investors enter and exit the market as per global trends.

 

 

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