The Reserve Bank of India has suggested a framework for international regulation of crypto currency after realising the turmoil in the crypto asset market.
The central bank, in its financial stability report that was released on December 29, 2022, said that "the turmoil in the crypto asset market highlights their intrinsic volatility and structural vulnerabilities, whereas their interconnectedness with the traditional financial system is increasing."
RBI has also suggested that there has to be some consistency in regulations and supervisory approaches at the international level. These regulations should be based on the principle of ‘same activity, same risk, same regulation’ approach.
This framework proposed by the RBI says that the authorities should have appropriate resources, power, and tools to supervise, oversee, and regulate crypto markets and asset activities proportionate to the amount of financial stability risk they pose, both domestically and internationally.
Additionally, the RBI has further suggested that there should be a comprehensive governance and effective risk management framework that addresses financial stability risks which arise from interconnectedness.
With inputs from IANS
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