May 20, 2024
By Sharan Kaur Phillora
India’s market watchdog, the Securities and Exchange Board of India (SEBI), has suggested that multiple regulators oversee cryptocurrency trade, indicating a willingness to embrace private virtual assets. This recommendation, contained in documents reviewed by Reuters, is the strongest signal yet of a potential shift in India’s regulatory stance.
Here’s what we know:
The SEBI’s position diverges significantly from that of the Reserve Bank of India (RBI), which views private digital currencies as a macroeconomic risk. These differing viewpoints have been presented to a government panel responsible for developing policy recommendations for the finance ministry. Notably, SEBI’s stance has not been previously reported.
Since 2018, India has maintained a tough stance on cryptocurrencies, highlighted by the central bank’s ban on lenders and financial intermediaries dealing with crypto users or exchanges. Although the Supreme Court later overturned this ban, the government has continued to express concerns. In 2021, it drafted a Crypto bill that would have prohibited private cryptocurrencies, but the bill has not yet been introduced. During its G20 presidency last year, India advocated for a global regulatory framework for digital assets.
The RBI, however, remains steadfast in its support for a ban on stablecoins, as per a source familiar with the panel’s discussions. This source, requesting anonymity, mentioned that the panel aims to finalize its report by June. Stablecoins, designed to maintain a stable exchange rate with fiat currencies, are seen by the RBI as a particular risk due to their potential for volatility.
In contrast, SEBI’s submissions to the government panel suggest that activities related to cryptocurrencies should fall under the purview of relevant regulators. SEBI opposes the idea of a single unified regulator for digital assets. It proposes that it could oversee cryptocurrencies classified as securities, manage Initial Coin Offerings (ICOs), and issue licenses for equity market-related crypto products.
This evolving regulatory landscape in India highlights the complex and divergent views on how best to manage the burgeoning cryptocurrency sector.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
