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.
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