Is India moving towards banning crypto assets in its G20 Presidency
The Reserve Bank of India (RBI), in a report released today, stated that crypto assets are volatile and have high correlations to the existing equity market. These similarities are so striking that they contradict industry claims that virtual assets are an alternative source of value because of the inflation-hedging benefits associated with them.
Crypto Frameworks In Development
India announced Thursday that it will prioritize the development of a global framework for regulation of unbacked crypto assets, stablecoins and decentralized finance (DeFI) during its current presidency. India also stated that it would explore the possibility of prohibition, which could be a major setback for the industry’s continued development.
According to the Financial Stability Report, released by RBI on Thursday, “To address potential financial stability risk and protect investors it is important that we arrive at a shared approach to crypto assets.”
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The RBI issued a warning, echoing the sentiments expressed by other central banks around the world, that crypto might “divert finance away from traditional financing” with a greater effect on the actual economy if it becomes more integrated into the mainstream financial systems.
India to Ban Crypto?
The report said that international options were being considered when developing a regulatory framework to allow cryptocurrencies. One way to do this is to make them subject to the same regulations as traditional financial intermediaries or exchanges. They were open to the possibility of banning the entire crypto market. According to the report:
“Another option is to ban crypto assets, as their real life use cases in reality are very negligible. The challenge is that different countries have differing legal systems and individual rights vis?-vis state power.
The Indian central bank is one of the most vocal critics of cryptocurrency. Shaktikanta Das, Governor of RBI, issued a warning last week that private cryptocurrency use would lead to the next financial crisis.
According to Das, cryptocurrency is rooted in the idea that it undermines or subverts the current financial system. Das stated that they don’t believe in a central bank or a controlled financial market. He also stated that he believes that the crypto market should not be allowed and added, “I’m yet hear a good argument about its public purpose.”
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