India’s SEBI recommends local regulators to regulate crypto trading.
The Securities and Exchange Board of India (SEBI) has proposed multiple regulators to regulate cryptocurrency trading in the country, according to documents seen recently by Reuters.
The documents suggest that the division in India's financial authorities should be controlled by regulatory oversight. In a separate document, the Reserve Bank of India (RBI) argued that digital currencies pose a macroeconomic risk to the country.
Government officials submitted the documents to a panel tasked with advising the country's finance ministry on policy, Reuters reported.
Instead of having a unified regulator dealing with digital assets, SEBI has recommended that different regulators jointly monitor digital asset activities that fall under their jurisdiction.
In this case, SEBI regulates digital assets classified as securities and initial coin offerings and licenses financial products. Meanwhile, the Reserve Bank oversees fiat-backed stablecoins.
Crypto-related insurance falls under the domain of the Insurance Regulatory and Development Authority of India, and the Pension Fund Regulatory and Development Authority oversees pension issues related to digital assets. The Indian Consumer Protection Act should be applied to disputes between investors.
The country's Reserve Bank has 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 facilitate tax evasion and that decentralized peer-to-peer transactions based on cryptocurrencies rely on compliance, which could threaten fiscal stability.
The RBI also says that cryptocurrencies could deprive central banks of revenue from creating money.
India has been working on reforming its regulatory framework to include digital assets. In the year In December 2023, the country issued non-compliance notices to 15 foreign crypto exchanges, blocking the companies' URLs and mobile apps for domestic users.
At the time of writing, KuCoin and Binance are the only exchanges that have received permission from the Financial Intelligence Unit to resume operations. The Indian government had recently called on G20 members to cooperate in regulating digital assets.
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