Regulation
India’s SEBI is open to regulating cryptocurrencies, unlike the Reserve Bank
India’s market watchdog, the Securities and Exchange Board of India (SEBI), has indicated that crypto-asset trading needs more regulators at the helm. This is in contrast to the Reserve Bank of India (RBI), which believes private digital currencies still pose a risk.
Both SEBI and RBI’s position were presented to a government committee tasked with developing a policy for the finance ministry. SEBI’s recommendation, which had not been published previously, indicates the willingness of some authorities to allow the use of private virtual assets in India.
India has taken a tough stance against cryptocurrencies. The central bank banned lenders from dealing with cryptocurrency users or exchanges, but the Supreme Court later overturned this ban. Despite this, the RBI continues to support a ban on stablecoins due to concerns about fiscal stability and tax evasion.
SEBI has proposed that multiple regulators supervise cryptocurrency activities within their areas instead of having a single unified regulator. SEBI would manage cryptocurrencies like securities and ICOs, while the RBI would regulate tokens backed by fiat currencies. The IRDAI and PFRDA would manage virtual assets related to insurance and pensions.
Investor complaints should be addressed under the Consumer Protection Act. The RBI remains cautious due to risks such as tax evasion and reliance on voluntary compliance in decentralized P2P businesses, which could impact fiscal stability and seigniorage income.
Read also: Rep. Nickel Urges SEC to Retire Cryptocurrency Custody Regulation.