In a world witnessing an explosion of financial technology (fintech) innovations competing with traditional financial methods, it makes sense to have a safe and secure internet-based decentralised currency platform. Cryptocurrency offers that in purely private form with transparency to every financial transaction.
Cryptocurrencies, built using blockchain technology, undoubtedly could lead to improvements on the current payments system.
But what is a cryptocurrency? Simply put, it is "a type of digital money which is fully digital, decentralised and stored in the distributed public ledger called "blockchain". Like the internet for information, blockchain technology is a boon for transactions.
A lack of centralised control is what makes blockchain so popular.
There are today approximately 5,392 cryptocurrencies worldwide, with a total market capitalisation of around $201 billion. China's National Digital Currency DCEP has already run various tests and trials to win the digital currency race and unseat the dollar. The LIBRA is another cryptocurrency that has been developed by the American social media company, Facebook Inc.
When the world is racing towards cryptocurrency development, SAARC countries seem unclear about how to regulate it. Nepal Rastra Bank has officially declared Bitcoin and other cryptocurrencies as illegal forms of financial tender. The Indian government is exploring the creation of a state-backed digital currency issued by the RBI, while banning private ones like Bitcoin.
Cryptocurrencies are not officially regulated in Pakistan, however, it's not illegal or banned. Cryptocurrencies are not considered legal tender in Bangladesh and Bhutan. The Central Bank of Sri Lanka has not given license or authorisation to any entity to operate schemes involving virtual currencies, including cryptocurrencies.
But, selling or buying cryptocurrencies in Sri Lanka is not against the law. Similarly, it is technically legal to buy and sell Bitcoins or organise Initial Coin Offerings (ICOs) in the Maldives.
Some policy analysts support a ban on cryptocurrencies, concerned that it can be misused for smuggling or money laundering.
But I think receiving and sending payments from international cryptocurrencies should be regulated. The free transaction should be made available within the SAARC countries, and the currency should be backed by creating a SAARC Bank. This is how we can move ahead with the technology and make some impact on the world economy. "SAAR- Coin" will be for SAARC countries what the euro is for European nations.
A version of this article appears in the print on April 2, 2021, of The Himalayan Times.