India’s SEBI open to regulating cryptocurrencies, RBI wants to ban stablecoins

The Securities and Exchange Board of India (SEBI) has called for effective action among currency regulators, while the Reserve Bank of India (RBI) wants an end to sanctions.
The
SEBI proposal shows a willingness to embrace private equity, a process that is unprecedented in India.

The RBI sees sovereign wealth funds as a potential risk to the economy.

According to a Reuters report, these comments were made to a “government panel” responsible for policymaking at the Ministry of Finance.

Multiple regulatory scheme of SEBI Vs. RBI Bank offer

SEBI has suggested that various regulatory bodies should monitor income tax activities under their jurisdiction. He also suggested avoiding a single controller for digital assets.

SEBI said it may regulate products classified as securities and initial coin offerings (ICOs). SEBI may also grant licenses for relevant market products.

This would be similar to the United States, where securities and exchanges are regulated by the Securities and Exchange Commission (SEC).

Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA) determine the assets of insurance and pension related structures as per their requirements.

He also suggested that importers’ issues should be addressed under the Indian Consumer Protection Act.

RBI against crypto

India has taken a strong stance on cryptocurrencies since 2018. The RBI has banned lenders and financial intermediaries from working with crypto users or exchanges. However, the Supreme Court overturned this decision.

In 2021, the government prepared a bill to ban dossiers, but this was not accepted.

In 2023, when he was the G20 president, the country demanded that the whole world regulate such properties.

The RBI remains in favor of monetary sanctions, believing that digital currencies reflect economic risks.

The Hindu reported that RBI Deputy Governor T. Rabi Sankar believes stablecoins, especially those linked to economies such as the US and Europe, are risky.
“We must be very careful when authorizing these materials… Based on past experience in other countries, this is a threat to political sovereignty,”
said.

The RBI has once again expressed concern over the use of funds due to risks such as tax evasion and decentralized (P2P) transactions based on voluntary compliance.

He also expressed concern about the loss of ‘seigniorage’, the income from the creation of money.

After the Supreme Court overturned its verdict in 2018, the RBI called for strict regulations by banning cryptocurrencies from the Indian financial system.

Despite this, clandestine trade continued and the government began imposing a secret tax in 2022. Later, all exchanges had to register locally to facilitate trading.

Although no official statement was made, Reuters added that the group may present its report in June.