Q. Which of the following are the challenges associated with Legalizing Crypto currencies in India?
1. Safety and security of cryptocurrencies.
2. Volatility of cryptocurrency.
3. High investor protection.
4. Non-regulation of Cryptocurrency.
Which of the statements given above is/are correct?

[A] 2 and 4 only

[B] 1, 2 and 4 only

[C] 2, 3 and 4 only

[D] 1, 2, 3 and 4

Answer: B
Notes:
  1. Safety and security of cryptocurrencies: This is one of the key issues with cryptocurrency. Mt Gox bankruptcy case is a highlight of this. Mt gox is a Tokyo-based cryptocurrency exchange. After the cyberattack, several thousands of bitcoin went lost and the company is yet to settle the claim. (Statement 1 is correct) 
  2. No investor protection: Since the cryptocurrency transactions are anonymous in nature, there is no investor/consumer protection in cryptocurrencies. (Statement 3 is incorrect) 
  3. Conflict of interest: Globally, crypto-currency exchanges act as both custodian and a regulator. So, their own interest and consumer protection get into conflict. 
  4. Non-regulation: There are some cryptocurrency regulators who often indulge in money laundering and terrorism financing. Further, they are immune to the Central Bank regulation of various countries. (Statement 4 is correct) 
  5. The volatility of cryptocurrency: Many cryptocurrencies have only a limited amount of coins. For example, Bitcoins fixed the maximum possible number as 21 million. This creates an increase in demand with each passing day and creates instability in exchange rates. This made the cryptocurrency more volatile in nature. (Statement 2 is correct) 

Source: There’s a major new risk in town and it’s called crypto