Posted inNews

Bank of India report calls for regulatory coordination on crypto market challenges

December 29, 2022No Comments


The Reserve Bank of India (RBI) has appealed to the country's presidency of the G20 group of the world's largest economies as a pulpit to call for the development of a global regulatory framework for crypto assets. In its latest financial stability report, published on Dec. 29, the bank once again raised concerns about the burgeoning crypto ecosystem, suggesting that parts of it could be banned.

Overall, the report was optimistic about current conditions in the country, despite "strong global headwinds", saying that "the Indian economy and domestic financial system remain resilient." However, the tone changed drastically in their crypto discussion, as highlighted a familiar long list of crises that hit the cryptoverse in 2022. He noted cryptocurrency's volatility, high correlation to stocks and its inadequacy as an inflation hedge, as well as issues with governance, adding:

โ€œLeverage is a constant theme running through the crypto ecosystem, making failures quick and losses huge and sudden.โ€

Be that as it may, the rise in prices in that ecosystem drives the popularity of cryptocurrencies, especially among the "younger segment of the population." The report concluded:

"To address potential future financial stability risks and protect consumers and investors, it is important to come to a common approach for crypto assets."

The report saw three options for crypto regulation. The first was โ€œthe same risk, same regulatory outcome principleโ€. Second, he suggested the possibility of a ban on crypto assets โ€œsince their real-life use cases are almost negligible.โ€ This option would be complicated by โ€œdifferent legal systems and individual rights face to face state powersโ€ โ€‹โ€‹worldwide. A third option, "let it implode" without regulatory action, was deemed too risky for mainstream finance to pursue. The report noted that:

"Under India's G20 presidency, one of the priorities is to develop a framework for global regulation, including the possibility of a ban, of unbacked crypto assets, stablecoins and DeFi."

Related: Crypto Could Trigger Next Financial Crisis, Says India's RBI Chief

crypto regulation it was a G20 priority for India from the beginning of his presidency. Despite the government's generally negative position on cryptocurrencies, there is an estimated 115 million users in India. the RBI is more optimistic in the digital currency of the central bank. Indian too has one of the largest in the world Web 3 work forces.