In a report that was released today, the Reserve Bank of India (RBI) stated that crypto assets are highly volatile and exhibit high correlations with the existing equity market. The similarities are such that, it contradicts the industry’s narrative and claims about virtual assets being an alternative source of value due to the inflation-hedging benefits that are supposedly associated with them.

India announced on Thursday that during its current presidency of the G20, it would prioritize the development of a framework for global regulation of unbacked crypto assets, stablecoins, and decentralized finance (DeFI). Additionally, India stated that it would also explore the “possibility of prohibition,” which could be a significant setback for the industry as it continues to develop.

“To address potential financial stability risks and protect investors, it is important to arrive at a common approach to crypto assets”, the Financial Stability Report released by RBI said on Thursday.

One of the most outspoken critics of the cryptocurrency business is the Indian central bank. Last week, RBI Governor Shaktikanta Das issued a warning, stating that unless private cryptocurrencies are outlawed, the next financial crisis will be caused by their use.

Cryptocurrency, according to Das, has its roots in the notion that it subverts or undermines the current financial system. “They don’t believe in the central bank” or a controlled financial system, Das said. He further added that he believes the crypto market should be disallowed and said, “I’m yet to hear a good argument about what public purpose it serves.”

(By Pratik Bhuyan)