Bank of India report calls for regulatory coordination on crypto market challenges
The Reserve Bank of India's financial stability report is negative about cryptocurrency and reminds the world that India is looking for global action on crypto regulations.
The Reserve Bank of India (RBI) has expressed concerns about the burgeoning crypto ecosystem and suggested parts of it could be banned.
The latest RBI financial stability report express on Dec 29 that the Central bank said it would use its rotating presidency of the G20 group of the world's largest economies to call for the development of a global regulatory framework of crypto assets.
The Indian economy and domestic financial system remain resilient the tone changed drastically in its discussion of crypto as it highlighted a familiar laundry list of crises that struck 2022.
Indian governance added:
"Leverage is a constant theme running across the crypto ecosystem making failures rapid and losses huge and sudden."
Rising prices in that ecosystem drive crypto's popularity in the younger segment of the population.
The report expressed:
"To address potential future financial stability risks and to protect consumers and investors it is important to arrive at a common approach to crypto assets"
The report saw three options for crypto regulations the first was the same risk and same regulatory outcome principle second it suggested the possibility of a prohibition of crypto assets this option would be complicated by different legal systems and individual rights via vis state power globally a third option let it implode without regulatory action was considered too risky for mainstream finance to pursue the report express that:
"Under India's G20 presidency one of the priorities is to develop a framework for global regulation including the possibility of prohibition of unbacked crypto assets. stablecoins and DeFi"
Crypto regulation was a G20 priority for India from the beginning of its presidency the government's negative position on cryptocurrency there are an estimated 115 million users in India the RBI is more bullish on central bank digital currency (CBDC) also India has one of the world's largest Web3 workforces.