SEBI Proposes Multifaceted Regulatory Bodies for Cryptocurrency Oversight in India
Summary:
The Securities and Exchange Board of India (SEBI) has proposed that multiple regulators within India's financial authorities should monitor cryptocurrency trading to lessen macroeconomic risks, as per new documents seen by Reuters. These regulators would oversee various aspects in their respective jurisdictions, from the issuance of ICOs to the regulation of stablecoins and crypto-related insurance. This comes amid RBI's concerns over potential issues such as tax evasion and risks to fiscal stability. The article also notes India's recent regulatory actions against foreign crypto exchanges and its call to G20 members for a collaborative approach to digital assets regulation.
In newly unveiled documents obtained by Reuters, the Securities and Exchange Board of India (SEBI) has advised that multiple governing bodies should supervise the trading of cryptocurrencies in the nation. The documents propose a branch within Indian financial authorities to be responsible for the regulatory supervision. Conversely, the Reserve Bank of India (RBI), in a different document, warned that cryptocurrencies could impose a macroeconomic threat to the nation.
These documents were forwarded by government officials to a committee given the responsibility of advising the nation's finance ministry on policy formulation, according to Reuters. Instead of having a single unifying regulator for digital assets, SEBI suggests a collaborative oversight by different regulators, depending on their respective jurisdictions, for the governance of digital asset activities.
For instance, SEBI would regulate digital assets deemed as securities and initial coin offerings (ICOs), as well as grant licenses for financial products. Concurrently, the Reserve Bank would take care of fiat-supported stablecoins. Matters concerning crypto-related insurance would fall under the Insurance Regulatory and Development Authority of India (IRDAI), while the Pension Fund Regulatory and Development Authority (PFRDA) would handle pension matters related to digital assets. Any disputes between investors should be managed under the provisions of India’s Consumer Protection Act.
The Reserve Bank, on the other hand, holds a more cautious stance about cryptocurrencies. It is reported that RBI is in favour of a stablecoin prohibition, emphasizing concerns that digital assets could aid tax evasion. It also raised apprehensions regarding the decentralized nature of peer-to-peer (P2P) cryptocurrency transactions, which rely on voluntary compliance, thereby posing a threat to fiscal stability. The RBI also alleges that the creation of cryptocurrencies could cause a decrease in income for central banks.
India is in the process of modifying its regulatory framework to accommodate digital assets. It took action in December 2023 by issuing 15 noncompliance notices to international crypto exchanges, barring local users from accessing their URLs and mobile applications. At present, Binance and KuCoin are the sole exchanges that have received licenses from the Financial Intelligence Unit (FIU) to resume their operations. The Indian government has recently urged G20 members to collaborate in regulating digital assets.
Magazine: What roles do crypto market makers play? Is it to provide liquidity or to manipulate?
Published At
5/16/2024 8:10:00 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.