The Reserve Bank of India (RBI) says that the collapse of the crypto exchange FTX and the turmoil that affected the cryptocurrency market have highlighted the inherent vulnerabilities in the crypto ecosystem.
The RBI in its Financial Stability Report (FSR) for December released last week noted that there was a need for global legislation on cryptocurrency and other digital assets.
This regulation, it said would include the possibility of prohibition, of unbacked crypto assets, stablecoins, and defi.
The document, which discussed in detail, the concept of CBDC, cryptocurrency assets as well as decentralized finance(DeFi) stressed that regulating crypto assets has come with challenges, due to a lack of an “appropriate policy approach”.
“Regulating new technology and business models after they have grown to a systemic level is challenging,
“To promote responsible innovation and to mitigate financial stability risks in the crypto ecosystem, it is vital for policymakers to design an appropriate policy approach.”