A. V. Arun Kumar, Kiran Kumar Thoti |
Abstract
The interval between 2008 and 2021 saw the emergence and swift advancement of cryptocurrencies, signifying a transformative era in the global financial system. Arising in the wake of the 2008 financial crisis, bitcoin contested traditional monetary systems by providing a decentralised substitute for government-issued fiat currencies. This paper analyses the progression of cryptocurrency markets, their growing impact on financial systems, and the consequent regulatory reactions. The emergence of stablecoins, decentralised finance, and smart contracts has revolutionised the cryptocurrency ecosystem into a sophisticated and intricate financial domain. Despite technical progress and increasing popularity, cryptocurrencies continue to provoke discussion over financial stability, monetary policy, security vulnerabilities, investor protection, and the potential for illegal activity. This paper examines the many regulatory strategies implemented worldwide, from complete prohibitions to measured acceptance, highlighting the absence of a cohesive framework for regulating digital assets. Moreover, it examines the increasing interdependence between cryptocurrency markets and conventional finance, emphasising the possible systemic ramifications. This research seeks to elucidate the impact of cryptocurrencies on financial policy and economic institutions by analysing their foundational principles, market dynamics, institutional reactions, and political economy, thereby facilitating future inquiries into their long-term ramifications. The paper examines the difficulties of reconciling financial innovation with systemic stability, investigating regulatory barriers and possible remedies. It underscores the necessity for progressive regulatory frameworks to maintain the relevance of monetary authorities in the advancing digital financial era.
Keywords: Finance, Digital Currencies, Cryptocurrencies, Bitcoin, Global Currencies
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