In a recent report, the Reserve Bank of India (RBI) has proposed caution in case of unbacked crypto assets (such as Bitcoin), stablecoins and decentralised finance (DeFi) and crypto asset trading platforms citing the need for regulatory guardrails to ensure financial stability, consumer and investor protection.

In its annual 'Financial Stability Report' (FSR) 2022, India's central bank and regulatory body said that the early ramifications are reflected in the crypto ecosystem with one stablecoin losing almost all its value and another depegging from the US dollar. It referred to the collapse of TerraUSD and Luna cryptocurrencies that threw many investors into a panic in May. In a crash, the once bullish TerraUSD and sister coin Luna had lost almost all their value, sending shock waves across the world.