The Securities and Exchange Board of India (SEBI) has proposed that multiple regulators should be responsible for overseeing cryptocurrency trading in the country, according to recently released documents reviewed by Reuters.
The documents suggest that a specific division within India’s financial authorities should be in charge of regulatory oversight. In a separate document, the Reserve Bank of India (RBI) argued that digital currencies pose a macroeconomic risk to the nation.
Government officials presented these documents to a panel assigned with advising the country’s finance ministry on policy matters, as reported by Reuters.
Rather than having a single unified regulator overseeing digital assets, SEBI recommended that different regulators collectively supervise 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 regulate fiat-backed stablecoins.
Crypto-related insurance would fall under the authority of the Insurance Regulatory and Development Authority of India, while the Pension Fund Regulatory and Development Authority would oversee pension matters related to digital assets. Disputes between investors would be subject to India’s Consumer Protection Act.
The Reserve Bank of India holds a more skeptical view of cryptocurrencies. According to sources familiar with the matter, the RBI supports the idea of banning stablecoins. The agency also expressed concerns that digital assets could enable tax evasion and highlighted the risks to fiscal stability posed by decentralized peer-to-peer transactions in cryptocurrencies, which rely on voluntary compliance.
The RBI further believes that cryptocurrencies could lead to a loss of income from money creation for central banks.
India has been working on adjusting its regulatory framework to include digital assets. In December 2023, the country issued 15 notices of noncompliance to foreign crypto exchanges, resulting in the blocking of their URLs and mobile applications for local users.
Currently, KuCoin and Binance are the only exchanges that have obtained licenses from the Financial Intelligence Unit to resume operations. The Indian government recently called on G20 members to collaborate in regulating digital assets.
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