SEBI Open to Oversight of Crypto Trade, in Contrast to RBI

Key Points:

• SEBI’s Position: The Securities and Exchange Board of India (SEBI) is open to overseeing trade in cryptocurrencies, in contrast to the Reserve Bank of India (RBI), which views private digital currencies as a macroeconomic risk.
• Government Panel: SEBI’s stance was revealed in documents submitted to a government panel tasked with formulating policy for the finance ministry.
• Contrast with RBI: While the RBI favors banning stablecoins, SEBI recommends different regulators oversee activities related to cryptocurrencies within their domains, avoiding a single unified regulator for digital assets.
• Regulatory Landscape: India has taken a tough stance against cryptocurrencies since 2018, with the central bank initially prohibiting financial intermediaries from dealing with crypto users or exchanges, a move later struck down by the Supreme Court.
• Recent Developments: In 2021, the government prepared a bill to ban private cryptocurrencies, but it has not been introduced. Last year, India called for a global framework to regulate such assets while it was president of the G20.
• SEBI’s Role: SEBI proposes monitoring cryptocurrencies resembling securities and overseeing activities like Initial Coin Offerings (ICOs). It could issue licenses for equity market-related products.
• Challenges: Despite regulatory efforts, trade in cryptocurrencies has flourished in India. The government introduced a tax on crypto transactions in 2022 and mandated local registration for exchanges facilitating crypto transactions within the country.

Context:

• Global Comparison: According to a PwC report, 31 countries have regulations allowing trade in cryptocurrencies, highlighting the need for India to navigate regulatory challenges in this evolving landscape.
• Ongoing Discussions: The government panel plans to finalize its report as early as June, indicating ongoing deliberations on crypto regulation in India.

SEBI’s openness to overseeing crypto trade suggests a nuanced approach to regulating digital assets in India, contrasting with the RBI’s more cautious stance. As discussions progress, stakeholders will closely watch for developments in the regulatory framework governing cryptocurrencies in the country.

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