- While the Reserve Bank of India (RBI) is pursuing a stablecoin ban, the Securities and Exchange Board of India (SEBI) on Thursday suggested a cooperative effort among authorities to oversee cryptocurrency trading.
- With this proposal, SEBI is showing that it is willing to accept private virtual assets, which is a departure from past practice in India.
However, the RBI believes that private digital currencies pose a risk to the macroeconomy.
These recommendations were given to a “government panel,” according to the Reuters story, which was entrusted with developing policy that the finance ministry would take into account.
The Multi-Regulator Plan by SEBI and the Ban Proposal by RBI
In its proposal, SEBI suggested that different regulators supervise cryptocurrency-related operations that come under their purview. It also recommended against having a single, all-encompassing regulator for digital assets.
SEBI declared that it could keep an eye on Initial Coin Offerings (ICOs) and cryptocurrencies classified as securities. Licenses for items relating to the equity market may also be granted by SEBI.
This would be comparable to the US, where the Securities and Exchange Commission (SEC) regulates cryptocurrency exchanges and securities.
The suggestion states that virtual assets pertaining to insurance and pensions should be regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA).
It also suggested that the Consumer Protection Act of India be used to settle complaints from cryptocurrency traders.
Anti-crypto is the RBI
India has taken a hard line on cryptocurrencies since 2018. Lenders and other financial intermediaries were not allowed to deal with cryptocurrency users or exchanges by the RBI. But this action was eventually overturned by the Supreme Court.
A bill that would have outlawed cryptocurrencies was drafted by the government in 2021; however, it has not yet been introduced.
During its G20 presidency in 2023, the nation demanded the establishment of an international framework to control these kinds of assets.
The RBI continues to support the prohibition of stablecoins because it considers digital currencies to be a risk to the macroeconomy.
According to The Hindu, T. Rabi Sankar, the Deputy Governor of the Reserve Bank of India, stablecoins can be dangerous, especially if they are connected to economies like the US and Europe.
We must exercise extreme caution when permitting these kinds of tools. It poses an existential threat to policy sovereignty, based on prior experiences in other nations, he said.
The RBI raised additional worries over cryptocurrencies, pointing to dangers such as tax evasion and decentralized peer-to-peer (P2P) activities that depend on voluntary compliance.
Concern over losing “seigniorage,” or revenue from the creation of money, was also expressed.
Following the Supreme Court’s 2018 rejection of its directives, the RBI called for tight adherence to rules and the removal of cryptocurrencies from India’s financial system.
Despite this, the trading of cryptocurrencies continued, and in 2022 the government passed a crypto tax. Afterwards, local registration was mandatory for all exchanges in order to facilitate bitcoin transactions.
There isn’t a press announcement, but according to unconfirmed reports, the panel might submit its report by June.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
