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The Reserve Bank of India (RBI) has proposed a framework for worldwide regulation of such crypto activities after observing the unrest in the market for crypto assets.
The central bank stated that “the turmoil in the crypto asset market highlights their intrinsic volatility and structural vulnerabilities, while their interconnectedness with the traditional financial system is increasing” in its report on financial stability, which was published on December 29, 2022.
The central bank has recommended that international approaches to regulatory and supervisory practises be uniform.
The guiding concept of these regulatory systems should be “same activity, same risk, same regulation.”
The framework suggests that authorities should have the proper authority, instruments, and resources to control, monitor, and oversee the local and international markets for crypto assets in proportion to the danger they pose to financial stability.
In addition, the RBI research has further recommended that comprehensive governance and adequate risk management frameworks be developed in order to address the risks to financial stability brought on by interconnection.