The Securities and Exchange Board of India (SEBI) has recommended that multiple regulators should oversee cryptocurrency trading in the country, according to documents recently disclosed and seen by Reuters. The proposal suggests that a division within India’s financial authorities should handle the regulatory oversight, aiming for a more specialized approach.
In a separate document, the Reserve Bank of India (RBI) expressed concerns that digital currencies pose a macroeconomic risk to India. These documents were submitted by government officials to a panel tasked with advising the country’s finance ministry on policy.
SEBI’s proposal advocates for different regulators to collectively oversee digital assets based on their specific jurisdictions. Under this plan, SEBI would monitor digital assets classified as securities and initial coin offerings (ICOs), as well as issue licenses for financial products. The Reserve Bank of India would oversee fiat-backed stablecoins.
Additionally, crypto-related insurance would fall under the domain of the Insurance Regulatory and Development Authority of India, while the Pension Fund Regulatory and Development Authority would regulate pension matters related to digital assets. India’s Consumer Protection Act should be applied to resolve disputes between investors.
The Reserve Bank of India holds a more cautious stance on cryptocurrencies. According to sources, the RBI supports the idea of banning stablecoins, highlighting concerns that digital assets could facilitate tax evasion and depend on voluntary compliance for decentralized peer-to-peer transactions, posing risks to fiscal stability. The RBI also noted that cryptocurrencies might result in 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, blocking the firms’ URLs and mobile applications for local users. Currently, KuCoin and Binance are the only exchanges able to obtain licenses from the Financial Intelligence Unit to restart operations.
In a recent move, the Indian government has called on members of the G20 to join forces in regulating digital assets, reflecting a push for international cooperation in this rapidly evolving sector.
