Regulation
Indian securities regulator proposes multi-agency approach to regulate crypto
The Securities and Exchange Board of India (SEBI) wants oversight of cryptocurrencies to be distributed, proposing a multi-agency approach.
Official documents disclosed by Reuters reveals that SEBI has recommended that different regulators work in unison to oversee the cryptocurrency sector in the country. The suggestions were presented to an advisory committee of India’s finance ministry.
Under the proposal, SEBI would monitor cryptocurrencies classified as securities, as well as initial coin offerings, and issue licenses for associated products.
All crypto-related insurance cases would fall under the domain of the Insurance Regulatory and Development Authority of India. Meanwhile, the Pension Fund Regulatory and Development Authority will monitor and regulate pension-related matters involving cryptocurrencies.
The proposal also suggests applying the country’s consumer protection law to resolve disputes between investors.
The Reserve Bank of India (RBI) has been proposed as the supervisor of fiat-backed stablecoins. However, the regulator has taken a more skeptical stance towards cryptocurrencies.
Sources familiar with the matter say the RBI favors an outright ban on stablecoins. The regulator has raised concerns about tax evasion.
The agency also warned that decentralized peer-to-peer transactions in cryptocurrencies depend on voluntary compliance and therefore pose risks to financial stability.
Furthermore, the RBI believes that cryptocurrencies would result in losses for central banks in terms of revenue generated from money creation.
“This development marks an important first step towards the creation of national legislation for the sector. […] The proposal to form an inter-ministerial body to manage Virtual Digital Assets (VDA) fits well with the aspirations of the industry, considering the diverse applications of these assets,” said Dilip Chenoy, President, Bharat Web3 Association (BWA), at crypto.news. .
Chenoy added that the government has sought input from industry to help shape the country’s regulatory approach, and that the BWA is “currently drafting a comprehensive document to this effect.”
In this context, Indian regulators have been pushing for foreign cryptocurrency service providers to be licensed by the Financial Intelligence Unit (FIU). At the time of publication, only KuCoin and Binance have met the requirements.
The FIU has also participated in initiatives to promote compliance among market participants in the country. Speaking at a recent capacity building and training workshop for Virtual Asset Service Providers (VASPs), FIU Director Vivek Aggarwal reiterated the importance of complying with the anti-money laundering and counter-terrorist financing (AML/CFT) framework.