The Securities and Exchange Board of India (SEBI) has put forth a proposal suggesting that multiple regulators should oversee cryptocurrency trading within the country, according to recently disclosed documents obtained by Reuters.
The documents propose that a division within India’s financial authorities should be responsible for regulatory oversight. In a separate document, the Reserve Bank of India (RBI) expressed concerns about digital currencies posing a macroeconomic risk to the country.
Government officials have submitted these documents to a panel tasked with advising the finance ministry on policy matters, as reported by Reuters.
Instead of having a single unified regulator for digital assets, SEBI recommends that different regulators collectively oversee activities related to digital assets falling under their respective jurisdictions.
Under this proposal, SEBI would monitor digital assets classified as securities and initial coin offerings, as well as issue licenses for financial products. On the other hand, the Reserve Bank would oversee stablecoins backed by fiat currencies.
The regulation of crypto-related insurance would be under the purview of the Insurance Regulatory and Development Authority of India, while the Pension Fund Regulatory and Development Authority would regulate pension matters pertaining to digital assets. Disputes between investors would be governed by India’s Consumer Protection Act.
The Reserve Bank of India adopts a more skeptical view towards cryptocurrencies. Sources familiar with the matter suggest that the RBI supports the idea of banning stablecoins. The agency also expressed concerns about digital assets facilitating tax evasion and highlighted the risks to fiscal stability posed by decentralized peer-to-peer cryptocurrency transactions that rely on voluntary compliance.
Furthermore, the RBI believes that cryptocurrencies may result in a loss of income from money creation for central banks.
India has been working on adjusting its regulatory framework to accommodate digital assets. In December 2023, the country issued 15 notices of noncompliance to foreign crypto exchanges, leading to the blocking of their URLs and mobile applications for local users.
As of now, KuCoin and Binance are the only exchanges that have obtained licenses from the Financial Intelligence Unit, enabling them to resume operations. The Indian government has recently called on G20 members to collaborate in regulating digital assets.
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