RBI calls for international regulation of cryptocurrency activities

122

The Reserve Bank of India (RBI) has called for a framework for international regulation of cryptocurrency activities in its latest financial stability report, citing the “intrinsic volatility and structural vulnerabilities” of the market and its increasing interconnectedness with the traditional financial system. The central bank has suggested that there should be consistency at the international level on regulatory and supervisory approaches, based on the principle of “same activity, same risk, same regulation.”

In the report, released on December 29, 2022, the RBI stated that authorities should have the appropriate powers, tools and resources to regulate, supervise and oversee cryptocurrency activities and markets, both domestically and internationally, in proportion to the financial stability risk they pose. The report also called for the creation of comprehensive governance and effective risk management frameworks to address financial stability risks arising from interconnectedness.

“The turmoil in crypto assets market highlights their intrinsic volatility and structural vulnerabilities, whereas their interconnectedness with the traditional financial system is increasing,” the RBI said in the report. “Therefore, it is important that authorities have appropriate powers, tools and resources to regulate, supervise and oversee crypto assets activities and markets, both domestically and internationally, proportionate to the financial stability risk they pose.”