The Reserve Bank of India (RBI) has again expressed concern over the growing crypto ecosystem and has proposed banning parts of it. In its latest financial stability report, published on December 29, the central bank said it will use its rotating presidency of the G20 group of the world’s largest economies to call for a global regulatory framework for crypto assets.
The report was generally optimistic about the country’s current conditions despite “strong global headwinds”, saying that “India’s economy and domestic financial system remain resilient”. The tone changed dramatically in the crypto discussion as it highlighted a prominent list of crypto crises in 2022. It cited crypto’s volatility, high correlation with stocks, and its inadequacy as a hedge against inflation as problems. with management and added.
“Leverage is a constant theme running through the crypto ecosystem, making failures quick and losses huge and sudden.”
Be that as it may, rising prices in that ecosystem are fueling crypto’s popularity, especially in the “younger segment of the population.” The report concluded:
“Achieving a common approach to crypto-assets is essential to address potential future risks to financial stability and protect consumers and investors.”
The report saw three options for crypto regulation. The first was the “same-risk-same-regulatory-outcome” principle. Second, it suggested the possibility of banning crypto-assets “because their real-life use cases are almost negligible.” This option would be complicated by “different legal systems and individual rights in the face of state powers” on a global scale. A third option, “let it blow up” without regulatory action, was considered too risky to pursue mainstream finance. The report stated that:
“One of the priorities during India’s G20 presidency is the development of a global regulatory framework, including the possibility of banning unsecured crypto-assets, stable metals and DeFi.”
Related. Crypto could cause the next financial crisis, says India’s RBI chief
Crypto regulation has been a priority for India at the G20 since the beginning of its presidency. Despite the government’s generally negative stance on cryptocurrency, there are about 115 million users in India. RBI is more bullish on central bank digital currency. India also has one of the largest Web 3 workforces in the world.
Like the first month’s meetings #G20India In conclusion, here is a summary of the priorities of the Finance Track. @FinMinIndia @RBI: pic.twitter.com/a9IyY41tW6
— G20 India (@g20org) December 22, 2022