The Reserve Bank Of India (RBI) is prioritizing the development of global crypto regulation among G20 nations, under the presidency of India. The central bank has warned of the potential risks that could destabilize global financial systems, such as turbulence in the crypto asset market.
Central Bank Of India Information about crypto regulation
India’s central bank Reserve Bank Of India (RBI) released its December Financial Stability Report (FSR) Thursday. The lengthy report includes discussion of crypto assets and central bank digital currencies.
“Regulating new technologies and business models after they have reached a systemic level is challenging,” According to the RBI report. “To promote responsible innovation and mitigate financial stability risks in the crypto ecosystem, it is vital that policy makers craft an appropriate policy approach.” The Indian central bank continued:
In this context, one of the main priorities for the G20 presidency of India is to establish a framework for global regulation including the possibility of banning unbacked crypto assets and stablecoins.
The central bank named “turbulence in the crypto asset market” one of the “major risks that can potentially undermine global financial stability.” Further, the report notes that the collapse in crypto exchange FTX followed by subsequent crypto market selloffs “have highlighted the inherent vulnerabilities in the crypto ecosystem.” It also mentioned the bankruptcy filings of several major crypto companies, including crypto hedge funds, Three Arrows Capital (3AC) and Crypto lender Celsius Network.
G20 members discuss crypto regulation
Ajay Seth, India’s economy secretary, earlier this month, stated that G20 members are working to reach a political consensus regarding crypto assets in order for global regulation to be better. Finance Minister Nirmala Sitharaman in October revealed that she would like to see a technology driven regulatory framework for crypto assets put in place during her G20 presidency.
The G20 (Group of 20) is comprised of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic Of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom and The United States, as well as The European Union. Together, these countries account for approximately 85% of global GDP.
The Reserve Bank Of India has recommended banning all cryptocurrencies that are not issued by the state, including bitcoin and Ethereum. Governor Shaktikanta Das warned: Cryptocurrencies will lead to the next financial crisis if not banned However, India’s Finance minister stated in July that both the regulation and ban on cryptocurrency can only be made effective by meaningful international cooperation.
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