There are three broad uses of the crypto blockchain technology — currency, business services such as decentralised finance and asset.

The currency is of two types — general currency and asset-backed stable coins.

Cryptography and blockchain environment consists of decentralised autonomous organisations. There is no identifiable owner of these businesses, though some of these may have created the technology, e.g. Bitcoin. It makes it difficult for the authorities to tax or regulate or to get them registered. It is to be deliberated how to go about this.

Then there are smart contracts which are self-executing without any intervention. The existing laws of contract do not have provisions to deal with such contracts.

Currencies are issued by a sovereign. Private entities are barred from doing so except for the inner use of a platform. To illustrate, suppose there is a transaction on Ethereum blockchain which is an open-source blockchain. It could be allowed in Ether, which is the cryptocurrency of the Ethereum platform. It is akin to clubs or malls allowing transactions in tokens offered by them. It is so because it is difficult to do transactions in fiat currency in the crypto environment.

Stablecoins are favoured till the Federal comes up with a digital dollar. Digital dollar perhaps could be as easily transactable as stablecoins.

Crypto’s currency aspects could be regulated by the RBI. However, it is not suitable for other uses of the crypto as a regulator, say for crypto business and assets.