Indian securities regulator proposes multi-agency approach to regulate crypto

The Securities and Exchange Board of India (SEBI) is seeking decentralization of cryptocurrency oversight, proposing a multi-agency approach.

Official documents disclosed by Reuters reveal that SEBI has suggested that different regulators should work together to oversee the cryptocurrency sector in the country. The recommendations were submitted to the advisory panel of India’s finance ministry.

According to the proposal, SEBI will monitor cryptocurrencies classified as securities along with initial coin offerings and issue licenses for relevant products.

All crypto-related insurance cases will fall under the purview 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 proposes applying the country’s Consumer Protection Act to resolve investor disputes.

The Reserve Bank of India (RBI) has been proposed as the controller of fiat-backed stablecoins. However, the regulator has taken a more skeptical stance towards cryptocurrencies.

Sources familiar with the matter say the RBI is in favor of an outright ban on stablecoins. The regulator has expressed concerns about tax evasion.

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

Additionally, the RBI believes that cryptocurrencies will lead to losses in revenue from money creation for central banks.

“This development is an important first step towards establishing domestic legislation for the sector. […] The proposal to create an inter-ministerial body to manage Virtual Digital Assets (VDAs) aligns well with the industry’s aspirations considering the various applications of these assets, Dilip Chenoy, president of the Bharat Web3 Association (BWA), told crypto.news. .

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

In this backdrop, Indian regulators are pushing for licensing of foreign cryptocurrency service providers under the Financial Intelligence Unit (FIU). At the time of publication, only KuCoin and Binance complied with the requirements.

The Financial Intelligence Unit has also participated in initiatives aimed at promoting harmony among market participants in the country. Speaking at a recent capacity building and training workshop for Virtual Asset Service Providers (VASPs), Financial Intelligence Unit Director Vivek Aggarwal reiterated the importance of complying with the Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) framework.