MAT Exam 2024 Paper

Question Numbers: 6-10DIRECTIONS (Qs. 6-10): Read the following passage carefully and answer the questions that follow.The rise of crypto currencies has challenged traditional financial systems and raised critical questions about sovereignty, privacy, and regulatory oversight. Governments worldwide facea dilemma: while block chain technology promises decentralized trust and lower transaction costs, it also facilitates illicit transactions and undermines capital controls. Central banks are now exploring Central Bank Digital Currencies (CBDCs) as a counterbalance, hoping to combine digital convenience with monetary oversight.Countries differ in their approach. El Salvador adopted Bitcoin as legal tender, while China banned crypto trading and launched its digital yuan. The European Union leans toward strict regulation to prevent financial crime. Meanwhile, tax evasion, cybercrime, and stablecoin vulnerabilities continue to worry policymakers. In this highly fragmented policy environment, innovation races ahead while regulation tries to keep pace.Advocates claim crypto empowers the unbanked and resists censorship. Critics highlight its volatility, speculative bubbles, and environmental impact due to energy-intensive mining. The technology's borderless nature also clashes with territorially bound laws, making global cooperation challenging. Regulators often struggle to define how to classify various crypto assets, many of which defy traditional definitions of currency or securities. Ultimately, striking a regulatory balance is key. Overregulation may stifle innovation, while under regulation risks financial instability. A nuanced framework that distinguishes between utility, investment, and payment tokens may be required to navigate this evolving financial frontier. As technology continues to evolve, regulators must stay informed and adaptable.