The Securities and Exchange Board of India (SEBI) has submitted its recommendations for regulating crypto assets to a government panel. SEBI suggests multiple regulators for different aspects of cryptocurrency trade. India’s central bank, the Reserve Bank of India (RBI), however, views crypto as a macroeconomic risk, highlighting concerns about tax evasion and fiscal stability.

SEBI Advocates Multiple Regulators for Crypto

The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), the country’s central bank, have each submitted documents concerning crypto asset regulation to a government panel tasked with formulating policy for the finance ministry, Reuters reported.

SEBI suggests multiple regulators oversee cryptocurrency trade, showing openness to assets like bitcoin and ether. The watchdog proposes that various regulators manage cryptocurrency activities within their domains, opposing a unified regulator. SEBI could monitor cryptocurrencies resembling securities, oversee initial coin offerings (ICOs), and issue licenses for equity market-related products.

The proposal assigns the Reserve Bank of India to regulate crypto assets backed by fiat currencies. The Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA) would oversee insurance and pension-related virtual assets. SEBI also recommends addressing investor grievances under India’s Consumer Protection Act.

The stance of SEBI contrasts with that of the RBI, which regards private digital currencies, including bitcoin and ether, as a macroeconomic risk. In its submissions, the Indian central bank expressed concerns that cryptocurrencies could facilitate tax evasion and that decentralized peer-to-peer (P2P) activities in cryptocurrencies would rely on voluntary compliance, posing risks to fiscal stability.

India currently lacks a specific regulatory framework for cryptocurrencies. In 2021, a government panel drafted a bill to regulate digital assets, though it remains unintroduced. As G20 president, India advocated for a global regulatory framework for cryptocurrencies. The Financial Intelligence Unit – India (FIU-IND) currently oversees 47 cryptocurrency-related entities and recently approved crypto exchanges Binance and Kucoin as Virtual Asset Service Providers. In March, the Indian finance minister revealed that she anticipates a regulatory framework for crypto to emerge from G20 discussions.

Source : Bitcoin News / May 18, 2024