Indian Securities Regulator Proposes Collaborative Multi-Agency Approach for Crypto Regulation
India’s Securities and Exchange Board of India (SEBI) is proposing a multi-agency approach for overseeing cryptocurrencies in the nation.
Official documents disclosed by Reuters show that SEBI suggested different regulators collaborating to regulate the cryptocurrency sector in India. The recommendations were presented to an advisory panel for the finance ministry.
According to the proposal, SEBI would oversee cryptocurrencies classified as securities and initial coin offerings, as well as issue licenses for related products.
Crypto-related insurance cases would fall under the jurisdiction of the Insurance Regulatory and Development Authority of India, while pension-related matters involving cryptocurrencies would be monitored and regulated by the Pension Fund Regulatory and Development Authority.
The proposal also includes applying the Consumer Protection Act of India to resolve investor disputes.
The Reserve Bank of India (RBI) was suggested as the overseer for fiat-backed stablecoins, despite its skeptical stance towards cryptocurrencies.
Sources familiar with the matter say that the RBI is leaning towards banning stablecoins due to concerns about tax evasion. The regulator has also expressed worries about the risks cryptocurrencies pose to financial stability due to decentralized peer-to-peer transactions.
Additionally, the RBI believes that cryptocurrencies could lead to central banks losing revenue generated from money creation.
“This marks a significant first step towards creating domestic legislation for the sector. The proposal to establish an inter-ministerial body to regulate Virtual Digital Assets (VDAs) is in line with industry expectations, given the various applications of these assets,” said Dilip Chenoy, chairman of the Bharat Web3 Association (BWA), to crypto.news.
Chenoy mentioned that the government is seeking industry input to shape the regulatory approach, and the BWA is currently working on a comprehensive document for this purpose.
In light of these developments, Indian regulators are urging foreign cryptocurrency service providers to obtain licenses under the Financial Intelligence Unit (FIU). As of now, only KuCoin and Binance have met the requirements.
The FIU has been involved in initiatives aiming to enhance compliance among market participants in India. Speaking at a recent capacity-building and training workshop for Virtual Asset Service Providers (VASPs), FIU Director Vivek Aggarwal emphasized the importance of adhering to the Anti Money Laundering / Countering the Financing of Terrorism (AML/CFT) framework.
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