India Considers Prohibiting Unbacked Crypto Under G20 Presidency

India is seriously intent on the development of global regulation for unbacked crypto assets, stablecoins and decentralised finance

India unbacked crypto

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Under its year-long presidency of the G20 that started early this month, India intends to prioritise the framework for global crypto regulation. In particular, the country considers prohibiting the use of unbacked crypto assets, stablecoins and DeFi.

The Reserve Bank of India (RBI) has recently reported on the high volatility of crypto assets. The bank claims cryptocurrencies exhibit high correlations with equities. That negates the industry’s narrative that virtual digital assets are an alternative source of value and can hedge inflation.

Besides, RBI mentioned global concerns that the crypto sector may become more interconnected with mainstream finance, acquiring a “broader effect on the real economy.” At the same time, the regulator worries that crypto doesn’t have any underlying value. Therefore, it could cause the next financial crisis, if it remains unregulated.

“I think crypto or private cryptocurrency is a fashionable way of describing what is otherwise a 100% speculative activity,” said RBI Governor Shaktikanta Das during the press conference.

Meanwhile, the Indian government doesn’t object to the creation of centralised digital assets. Thus, RBI is conducting the retail pilot of the “digital rupee.”

With more than 600 million connected users, India is the second-largest internet market globally. However, its economic and regulatory environments are not very crypto-friendly. Earlier this year, the country introduced taxation of virtual currency transactions.

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