India’s SEBI Recommends Multi-Regulator Approach for Crypto Oversight
The Securities and Exchange Board of India (SEBI) has recommended that multiple regulators should oversee various aspects of crypto trading in the country.
This stance, revealed in documents seen by Reuters, marks the strongest indication to date that at least some Indian authorities are open to allowing the use of private virtual assets.
Key points:
- SEBI suggests different regulators should oversee crypto activities that fall under their respective domains.
- The market watchdog recommends against a single, unified regulator for digital assets.
- SEBI’s position contrasts with the Reserve Bank of India’s (RBI) stance, which maintains that private digital currencies pose a macroeconomic risk.
According to the documents submitted to the government panel, SEBI proposed that it could monitor cryptocurrencies classified as securities and oversee Initial Coin Offerings (ICOs).
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The market watchdog also suggested that it could issue licenses for equity market-related products linked to cryptocurrencies. This approach would be similar to that in the United States, where securities and crypto exchange tokens fall under the purview of the Securities and Exchange Commission.
SEBI recommended RBI to monitor fiat-backed crypto
SEBI further suggested that the RBI could oversee crypto assets backed by fiat currencies. They also proposed that the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA) should regulate virtual assets related to insurance and pensions, respectively.
India has taken a tough stance against cryptocurrencies since 2018, when the RBI prohibited lenders and other financial intermediaries from dealing with crypto users or exchanges.Ā
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Despite these regulatory challenges, cryptocurrency trading has flourished in India. In an attempt to discourage such trading, the government introduced a tax on crypto transactions in 2022.
The recommendations made by SEBI, if adopted, could pave the way for a more nuanced and comprehensive regulatory framework for cryptocurrencies in India.
