SEBI Suggests Regulatory Oversight on Crypto Transactions as RBI Strengthens Control in India

India has witnessed a notable shift in its regulatory approach to cryptocurrency as the Securities and Exchange Board of India (SEBI) has proposed that multiple regulatory bodies should monitor the crypto market within the country. This marks a significant change from the Reserve Bank of India’s (RBI) firm stance, which has created considerable buzz among stakeholders in the Indian cryptocurrency space.

The RBI has maintained a stringent regulatory framework since 2017, barring financial institutions from providing services related to cryptocurrency transactions, designating them as Virtual Digital Assets (VDAs). In light of SEBI’s recent suggestion for polycentric regulatory oversight of the Indian crypto trading sphere, market dynamics are experiencing heightened activity and excitement.

Analyzing the Implications of the Recommendation

The new perspective championed by SEBI points to a potential shift in the Indian authorities’ attitude toward privately held virtual currencies. The cryptocurrency community in India is keenly awaiting further elaboration on these developments.

Ashish Singhal, the Co-founder of CoinSwitch, has expressed a positive outlook on SEBI’s position. He stated, “It is heartening to see progressive thoughts on crypto from SEBI, custodian of India’s vibrant equity markets. Just as earlier regulatory frameworks enabled consumer growth in sectors like telecom, IT, and e-commerce, SEBI’s initiative could be the beginning of a new chapter. There’s much to be deliberated on, but this is undoubtedly encouraging news for India’s crypto practitioners.”

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RBI’s Vigilance over Cryptocurrencies: The Current Understanding

The RBI’s scrutiny over cryptocurrencies can be traced back to 2013, with initial warnings to relevant parties involved in digital asset transactions. The landmark move in 2017 saw the prohibition of cryptocurrency-related services by regulated financial bodies.

However, during the recent G20 summit, India highlighted the worldwide imperative for an efficient regulatory mechanism for these assets, signaling a glimmer of optimism for those active in the Indian crypto markets.

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