Indian securities regulator proposes multi-agency approach to regulate crypto

India’s
Securities
and
Exchange
Board
of
India
(SEBI)
wants
cryptocurrency
oversight
to
be
distributed,
proposing
a
multi-agency
approach.

Official
documents

disclosed
by
Reuters
reveal
that
SEBI
recommended
that
different
regulators
should
work
in
unison
to
oversee
the
cryptocurrency
sector
in
the
nation.
The
suggestions
were
presented
to
an
advisory
panel
for
India’s
finance
ministry.

Per
the
proposal,
SEBI
would
monitor
cryptocurrencies
classified
as
securities,
along
with
initial
coin
offerings,
and
issue
licenses
for
related
products. 

All
crypto-related
insurance
cases
would
be
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
nation’s
Consumer
Protection
Act
to
sort
investor
disputes. 

The
Reserve
Bank
of
India
(RBI)
was
proposed
as
the
overseer
for
fiat-backed
stablecoins.
However,
the
regulator
has
portrayed
a
more
sceptical
stance
towards
cryptocurrencies.

Sources
familiar
with
the
matter
state
that
the
RBI
is
in
favour
of
an
outright
ban
on
stablecoins.
The
regulator
has
raised
concerns
about
tax
evasion. 

The
agency
has
also
warned
that
decentralized
peer-to-peer
transactions
in
cryptocurrencies
depend
on
voluntary
compliance
and,
hence,
pose
risks
to
financial
stability.

Further,
the
RBI
believes
that
cryptocurrencies
would
result
in
losses
for
central
banks
in
revenue
generated
from
money
creation.

“This
development
marks
a
significant
first
step
toward
creating
domestic
legislation
for
the
sector
[…]
The
proposal
to
form
an
inter-ministerial
body
to
manage
Virtual
Digital
Assets
(VDAs)
aligns
well
with
the
industry’s
aspirations,
given
the
diverse
applications
of
these
assets,”
Dilip
Chenoy,
chairman
of
the
Bharat
Web3
Association
(BWA),
told
crypto.news.

Chenoy
added
that
the
government
has
called
for
industry
input
to
help
shape
the
nation’s
regulatory
approach,
and
the
BWA
is
currently
“drafting
a
comprehensive
document
to
this
effect.”

Against
this
backdrop,
Indian
regulators
have
been
pushing
for
foreign
cryptocurrency
service
providers
to
be
licensed
under
the
Financial
Intelligence
Unit
(FIU).
At
the
time
of
publication,
only
KuCoin
and

Binance
have
complied
with
the
requirements.

The
FIU
has
also
participated
in
initiatives
looking
to
promote
compliance
among
market
participants
in
the
nation.
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
Anti
Money
Laundering
/
Countering
the
Financing
of
Terrorism
(AML/CFT)
framework.