India will Examine the Possibility of Banning Unbacked Crypto Assets During its G20 Presidency

Key takeaways:

  • Blockchain-based assets are one of the issues covered in the 172-page paper.
  • One of the main risks was listed as the market’s volatility for crypto assets.

The Reserve Bank of India (RBI), the country’s central bank, released its Financial Stability Report (FSR) for the month of December this past Thursday.

The 172-page research discusses issues such as government-issued CBDCs, blockchain-based assets, and decentralized finance (DeFi).

The central bank states in its Financial Stability Report that it is crucial to reach a consensus about crypto assets in order to handle any long-term financial stability threats, protect the public, and safeguard investors.

The development of a structure for global regulation, as well as the potential for restriction, of unbacked crypto assets, stablecoins, and DeFi is one of the priorities under India’s G20 presidency, according to the report.

The RBI research notes that it is difficult to regulate new technology and business models after they have become systemic in nature.

It is essential for legislators to create the right policy framework in order to encourage sustainable innovation and reduce financial stability concerns in the crypto ecosystem.

Early this month, India took up the Group 20 chairmanship for a year. The club, which consists of 19 countries from different continents and the EU, accounts for 85% of the global GDP.

Additionally, non-member nations like Singapore and Spain as well as international bodies like the World Bank and the IMF are invited.

According to the Reserve Bank of India (RBI), cryptocurrencies are extremely erratic, show substantial correlations with equities,” and have fallen in value when inflation has risen.

The RBI research notes that it is difficult to regulate new technology and business models after they have become systemic in nature.

It is essential for legislators to create the right policy framework in order to encourage sustainable entrepreneurship and reduce financial stability concerns in the crypto environment.

Early this month, India took up the Group 20 chairmanship for a year. The club, which consists of 19 countries from different continents and the EU, accounts for 85% of the global GDP.

Additionally, non-member nations like Singapore and Spain as well as international bodies like the World Bank and the IMF are invited.

According to the Reserve Bank of India (RBI), cryptocurrencies are extremely erratic, show substantial correlations with equities,” and have fallen in value when inflation has risen.

The paper also mentions how the failure of the cryptocurrency exchange FTX and the ensuing sell-offs in the cryptocurrency market have brought attention to the systemic flaws in the cryptocurrency ecosystem.

Additionally, it emphasizes the May terra/luna crash and the bankruptcies of other significant cryptocurrency businesses, including cryptocurrency hedge fund Three Arrows Capital (3AC) and cryptocurrency lender Celsius Network.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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