India’s market watchdog, the Securities and Exchange Board of India (SEBI), has indicated that trade in crypto-assets needs multiple regulators at the helm. This is in contrast to the Reserve Bank of India (RBI), which thinks that private digital currencies still pose a risk.
Both SEBI’s and RBI’s positions were presented to a government panel tasked with developing a policy for the finance ministry. SEBI’s recommendation, which was not previously reported, indicates a willingness among some authorities to permit the use of private virtual assets in India.
India has taken a strict stance against cryptocurrencies. The central bank banned lenders from dealing with crypto users or exchanges, but the Supreme Court later overturned this ban. Despite this, the RBI continues to advocate for a ban on stablecoins due to concerns about fiscal stability and tax evasion.
SEBI proposed that different regulators oversee cryptocurrency activities within their areas instead of having a single, unified regulator. SEBI would handle cryptocurrencies as securities and ICOs, while the RBI would regulate tokens backed by fiat currencies. The IRDAI and PFRDA would manage insurance and pension-related virtual assets.
Investor grievances should be addressed under the Consumer Protection Act. The RBI remains cautious due to risks like tax evasion and reliance on voluntary compliance in decentralized P2P activities, which could affect fiscal stability and seigniorage income.
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