The document presents an overview of the issues and challenges faced by cryptocurrencies, including a lack of regulation, a poor public image, and difficulties in usage and adoption. It emphasizes the growing global adoption of cryptocurrencies but highlights that they face significant hurdles, including technological limitations and legislative barriers. The way forward includes the establishment of a regulatory framework, international standards, and guidance on accounting and auditing for digital assets.

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Blockchain Dubai 2021
Tuesday, September 7, 2021
Cryptocurrencies: Issues, Challenges and Way Forward
Presented by:
Vinod Kashyap
NextGen Knowledge Solutions Private Ltd. 1

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Agenda
o Preamble
o Issues and Challenges
o Way Forward
o Q & A

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Preamble

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What is crypto currency?
Cryptocurrency is a digital asset that is based
on a network that uses robust cryptographic
encryption techniques for carrying out secure
financial transactions and is distributed across
a large number of computer systems.
Crypto Currency
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Source : nakomotinstitute.org
Crypto Currency Is Not a New Term
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Cryptocurrency, Bitcoin and Blockchain are no more
new terms to the most of educated people today.
On a lighter note.…
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How common is crypto? Reliance on remittances and the
prevalence of Peer-to-Peer Phone
payments have led to steep rise of
cryptocurrency use in Nigeria.
Almost a third of Nigerians confirmed
usage of crypto currencies.
2nd and 3rd highest rates of
cryptocurrency use in the survey
conducted by Statista were recorded in
Vietnam and Philippines.
Source : Statista
Key Points
Global Crypto Adoption
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Over 300+ Million Crypto Users
Worldwide
Bitcoin market cap reached US $ 1 Trillion
in February 2021.
Bitcoin constituted 66% of the total
market capitalization of cryptocurrencies
in 2020.
Top Countries : India (100 Mn.), USA (27
Mn.), Nigeria (13 Mn.), Vietnam (5.9
Mn.), UK (3.3 Mn.)
Source : Triple A
Key Points
Global Crypto Adoption
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Source : Triple A
Crypto Users Over the Time
Source : Global Trade
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Adoption Rate of Cryptocurrency and Internet Users

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Issues and Challenges

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Cryptocurrency is facing
challenge of survival and
mass adoption.
Blockchain has already
surpassed it.
Boom Phase For
Blockchain
Lack of Credible Image
Cryptocurrency has a PR
problem. . Cringe
advertisements, low quality
campaign, bad actors, get
rich quick schemes, , and
criminal alike. Sounds to
many people like “New
technology for age-old
scams and frauds.
Lack of Legislation &
Legal Obstacles
Digital currencies are pure
digital products which
most of the Government
authorities are not geared
to handle. Perhaps, that’s
the reason there are not
sufficient regulations for
users protection today.
Technological Issues
Despite technology
behind cryptocurrency is
over a decade old, it still
faces implementation
obstacles such as:
Interoperability, Usability,
Scalability, Data Rights,
Security etc.
Difficulties of Crypto
Transactions
Spending cryptocurrency is a
huge deal as compared to just
making investment and holding
cryptocurrency. The main
reasons for the same are: Ban
on Cryptocurrency
Transactions, Conversion issues,
Volatility of prices, people
loosing money, accounting &
auditing etc.
ISSUES AND CHALLENGES
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Blockchain technology has already
surpassed the challenge of survival and
is being adopted by masses.
Big names of global trade specialists are
moving towards blockchain.
Tradelens by IBM and Maersk’s joint
blockchain investment in the shipping
industry.
Source : Global Trade
Key Points
Boom Phase for Blockchain
Big Names of Global Trade are
moving to Blockchain
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Hype Cycle for Blockchain 2021;
More Action than Hype While cryptocurrency prices have crashed in
recent months, its important to not conflate
the value of Blockchain with the most recent
price of various coins.
Volatility is to be expected as crypto markets
sort out. Meanwhile, Blockchain innovation is
moving steadily forward.
Global Standards and accounting standards
need clarifications before most enterprises
adopt cryptocurrencies.
Source : Gartner
Key Points
Boom Phase for Blockchain Cont.…
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2 Lack of Credible Image
Cryptocurrency, despite having gone
through a boom phase, still has a PR
issue.
For many people, cryptocurrency
means new technology for adage frauds
This issue has hindered the growth of
cryptocurrency since inception and will
continue to do so.
Key Points
Bad Image
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Cringe Advertisements
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On a lighter note.…
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Get Rich Quick Schemes
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“This asset class is rampant in fraud, fraud and
abuse in certain applications.” Additional
parliamentary authorities have added to prevent
transactions, products and platforms from falling
during regulatory cracks. Is required.”
Gary Gensler
Chairman, Securities Exchange Commission, US
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Crypto Scams and Fraud Cases

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Crypto Scams and Fraud Cases Cont.…
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3 Lack of Legislation & Legal
Obstacles
Cryptocurrencies are digital products
and regulatory authorities are not geared
to handle such products .
Providing user protection has become a
huge challenge today.
Spending cryptocurrency is a huge
challenge for it’s holders. Untraceable
nature has made it scandalous in some
countries.
Key Points
Lack of Legislation & Legal Obstacles
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“Countries are moving fast towards creating digital currencies .
Or, so we hear from various surveys showing increasing number
of central banks making substantial progress towards having an
official digital currency.”
“But, in fact, close to 80 percent of the world’s central banks are
either not allowed to issue a digital currency under their existing
laws, or the legal framework is not clear."
Legal Framework Not Clear
Source : IMF
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Self-hosted wallets allow individuals to engage in transactions
on a peer-to-peer basis, creating an unacceptable money
laundering & terrorist financing risks.
It's time Government & regulators need to look into this & come
out with regulations to govern the use of self-hosted wallets.
Need for Regulation
Source : Blockchain Association
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Security tokens or securities raised in the form of crypto-tokens
can be a very important source of raising capital of the crypto-
assets and blockchain based services platforms in the form of
their initial coin offerings (ICO) as well as by the traditional firms
on the normal stock exchanges. There are certain other tokens
also which are created, issued & distributed using Distributed
Ledger Technology (DLT) or other technology and are commonly
known as utility tokens, stable coins, cryptocurrencies etc. that
are not covered in the proposed framework.
DFSA : Framework for Regulating Security Tokens
Source : DFSA
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Key Points
Cryptocurrency represents a Peer-to-Peer version
of Electronic Cash.
Cryptocurrency is merely a piece of computer
code.
To access your crypto funds or to transfer them
to someone else you need to know:-
1. Public Address
2. Private Keys 24
Key Points
Cryptocurrency represents a Peer-to-Peer version
of Electronic Cash.
Cryptocurrency is merely a piece of computer
code.
To access your crypto funds or to transfer them
to someone else you need to know:-
1. Public Address
2. Private Keys
Key Points
Cryptocurrency represents a Peer-to-Peer
version of Electronic Cash.
Cryptocurrency is merely a piece of
computer code.
To access your crypto funds or to transfer
them to someone else you need to know:-
1. Public Address
2. Private Keys
Crypto Assets Inheritance
Lack of Inheritance Plan
In February 2019, the crypto
community was stricken by the news
of the BTC trading platform Quadriga
losing $180 million worth of coins due
to its young founder’s death.
Gerald Cotten was only 30 years old
and it turned out that he was the
only one who knew the password to
access the platform’s funds. Thus,
the project went bankrupt and its
users lost their funds as well.
Source : Cremation Institute

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4 Cryptocurrency is facing
implementation obstacles
Cryptocurrency faces implementation
obstacles beyond the lack of regulations.
Technology is an emerging technology
and is still evolving .
Technology needs to evolve into a
mature system which is widely scalable
and accepted.
Key Points
Technological Issues
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The technology has been
divided to make multiple
uses of it in different
industrial domains that are
separate from
cryptocurrency.
Interoperability Standards Data Rights Security
Standards are key to
ensuring Blockchain’s
progress. They provide a
baseline for interoperable
systems.
Data has reached the
level of becoming digital
assets. It holds immense
value for individuals and
organizations.
Blockchain is more secure
than a traditional computer
system . However financial
breaches , data leaks &
losses are still happening.
01 02 03 04
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Technology is still immature

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5 Countries banning cryptocurrency
transactions, conversion issues,
price volatility, Guidance Spending in cryptocurrency is a big deal
than investing in it.
Ban on cryptocurrency transactions,
conversion, volatility in prices are major
issues.
Lack of Guidance on accounting,
reporting, valuation, and auditing is a
big challenge.
Key Points
Difficulties of Cryptocurrency Transactions
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Key Points
Cryptocurrency represents a Peer-to-Peer version
of Electronic Cash.
Cryptocurrency is merely a piece of computer
code.
To access your crypto funds or to transfer them
to someone else you need to know:-
1. Public Address
2. Private Keys 28
Key Points
Cryptocurrency represents a Peer-to-Peer version
of Electronic Cash.
Cryptocurrency is merely a piece of computer
code.
To access your crypto funds or to transfer them
to someone else you need to know:-
1. Public Address
2. Private Keys
Guidance Required
Accounting of cryptocurrency transactions &
digital assets
Reporting of cryptocurrency transactions &
digital assets
Valuation of cryptocurrency transactions
for financial reporting and taxation purpose
Lack of Guidance on Cryptocurrency Transactions & Digital Assets
Impact of Lack of Guidance
on Financial Reporting
Auditing cryptocurrency transactions &
digital assets

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Cryptocurrency Transactions: Method to Tax
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Udyog Manthan: Webinar on Finance Service Industry

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DFSA : Framework for Regulating Security Tokens
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“Slow adoption of technology by accounting professionals” is
the biggest challenge - Quality Council of India

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Way Forward

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Regulatory
Framework
Standards Interoperability Guidance
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Necessary regulations to
regulate the business of
cryptocurrency and digital
assets
Regulations to support the
growth
International Standards
on Blockchain be
developed
ISO / TC – 307
“Blockchain and Distributed
Ledger Technologies”
Performance management
and incentives
ISO / TC – 307 / SG 7
Interoperability of
Blockchain and Distributed
Ledger Technology System
Guidance on accounting,
reporting, valuation and
auditing cryptocurrency
transactions & digital
assets
Auditing Standards
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Way Forward

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“No matter how complex things are,
basically everything is simple.”
Questions
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THANK
YOU

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Vinod Kashyap
Email : vinod.Kashyap@nextgenknowledge.com