Don’t use credit cards like this!

Human beings by nature, cutting across centuries, have been lured by prospects of getting lofty returns on investments. In India, even though a large section of the population has shied away from market-linked returns, the lure of high returns has always been latent among a huge section of the population. Recently, driven by falling interest rates, more and more people are becoming more inclined towards investing in equity-linked savings instruments.

The emergence of cryptocurrencies in such a climate and the excitement around it have triggered a craze among millennials and generation Z looking to make a fast buck. This is where the authorities need to step in. With greed getting the better of near-absent investor education, those risking their money stand the chance of capital erosion very fast. The crypto industry is at a nascent stage and is flooded with many coins and tokens.

The stakeholders need to come up with filtering mechanisms that ensure people don’t wager their entire wealth on the new phenomenon and end up in penury. It would be foolhardy for the authorities to expect that merely by running disclaimers in small type in advertisements would fulfill the role of investor education. The stakeholders should put their heads together to run investor awareness programmes focussing on the risks of investing in an asset class that is not regulated in the country.

Although the education level of investors in cryptocurrencies is higher and they are digital-savvy, the risk of a large number of people rushing into extreme risks without comprehending its full import is too high. The regulatory uncertainty surrounding cryptocurrencies is also not helping matters. RBI Governor Shaktikanta Das has once again voiced his concerns on the asset class.

Das said the central bank has major concerns related to cryptocurrency and they have been conveyed to the government, adding that it is up to the individual investor to do his own due diligence. The message is clear — invest at your own risk. It is understandable that many see cryptocurrency as a breath of fresh air and its appeal has been burnished by legitimacy in South American countries. But it is always safe to play by the rules in the game of investing.