India’s SEBI Proposes Multi-Regulator Oversight for Cryptocurrency Trading

India’s cryptocurrency regulatory landscape is evolving, with the Securities and Exchange Board of India (SEBI) advocating for a multi-regulator approach to oversee various aspects of crypto trading. This recommendation, outlined in documents seen by Reuters, underscores a shift in attitude among Indian authorities towards embracing private virtual assets.

SEBI’s proposal suggests a division of regulatory responsibilities among different authorities, aiming for a comprehensive framework rather than centralizing oversight under a single entity. The documents indicate that SEBI could monitor cryptocurrencies classified as securities, including Initial Coin Offerings (ICOs), and issue licenses for equity market-related products tied to crypto assets. This approach mirrors the regulatory structure in the United States, where the Securities and Exchange Commission oversees securities and crypto exchange tokens.

Moreover, SEBI recommends that the Reserve Bank of India (RBI) oversee crypto assets backed by fiat currencies, such as stablecoins. Additionally, the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA) would regulate virtual assets related to insurance and pensions, respectively.

India’s journey towards regulating cryptocurrencies has been marked by regulatory challenges and shifting policies. Since 2018, when the RBI prohibited financial intermediaries from dealing with crypto users or exchanges, India has grappled with the implications of digital assets. Despite regulatory hurdles, cryptocurrency trading has thrived in the country, prompting the government to introduce a tax on crypto transactions in 2022 as a deterrent measure.

SEBI’s recommendations, if adopted, could herald a more nuanced and comprehensive regulatory framework for cryptocurrencies in India. By distributing oversight responsibilities among relevant authorities, the proposed approach seeks to address the complexities of the crypto market while mitigating risks associated with tax evasion and fiscal stability.

India’s evolving stance on cryptocurrencies reflects broader global trends, with regulators worldwide grappling with the challenges and opportunities presented by digital assets. As India navigates the regulatory landscape, stakeholders await further clarity on the government’s stance, particularly amidst ongoing national elections and discussions within regulatory bodies.