On Thursday, the Reserve Bank of India financial stability reportThe country hopes to use the G20 presidency, which took office on December 6, to coordinate global crypto regulation, according to documents.
RBI Calls for Global Crypto Regulation
2022 has seen a big leap in terms of cryptocurrency regulation, The White House’s First Regulatory Framework for Digital Assets— Many events throughout the year showed that we still have a long way to go.of The collapse of the virtual currency exchange FTX In particular, many people have questioned Whether regulators such as the SEC are doing enough to protect investorsand how far behind the curve they are.
In its Financial Stability report published on December 29, the Reserve Bank of India identified three ways to move forward when it comes to the cryptocurrency sector. Digital assets could be banned outright, regulated like traditional financial intermediaries, or “implode” and become “systemically irrelevant,” according to the document.
According to the RBI, real-life use cases for cryptocurrencies are “almost negligible”, but challenges preventing a full ban also come in the form of varying “legal systems and individual rights to state power” in different countries. will be dropped. The report warns against letting digital assets “implode”, saying they “could become more interconnected with mainstream finance and divert funding away from traditional finance.” This makes any “implosion” effect extremely damaging across the board.
Ultimately, the RBI report concludes that a global regulatory framework for digital assets is needed to “promote responsible innovation and reduce financial stability risks.” The document acknowledges that it will be difficult to “regulate new technologies and business models” once they reach a certain level, and one of India’s top goals for his G20 presidency is to It clearly states that it is the creation of a global regulatory framework for currencies.
RBI Analysis Of Major Crypto Disasters During 2022
The RBI report also provided an extensive analysis of the events that rocked the cryptocurrency sector throughout 2022 before coming to a discussion about the need for a global regulatory framework. Luna Collapse FTX’s bankruptcy was widely discussed along with their respective contagions.
The collapse of LUNA caused enormous damage, Bankruptcies of companies like Celsius Network, was used to show the volatility of the digital assets sector. FTX was also used as an example, but the effects of its downfall are just beginning to show. Bankruptcy of BlockFi.
The RBI also explained Bitcoin’s 74% price drop as an example of digital asset volatility.The need for broader cryptocurrency regulation will be recognized worldwide in 2022, with the SEC and CFTC actively contests for more control over sector.
This article originally appeared on tokenist