SEBI Proposes Regulatory Framework as India Adopts More Lenient Approach to Cryptocurrency

India’s Securities and Exchange Board (SEBI) is proposing a new approach to regulating cryptocurrencies, in contrast to the Reserve Bank of India’s (RBI) previous stance of banning them entirely. SEBI is suggesting a shared regulatory framework, with different agencies overseeing different aspects of the crypto sector.

SEBI’s proposal includes monitoring initial coin offerings (ICOs) and issuing licenses for equity market-related crypto products. They have also recommended that the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA) regulate insurance and pension-related virtual assets.

In terms of consumer protection, SEBI suggests implementing the Consumer Protection Act to address crypto-related grievances. They also propose that the RBI regulate crypto assets backed by fiat currencies, monitoring concerns such as tax evasion and fiscal stability risks.

These regulatory developments are taking place as the Indian government prepares to formalize regulations for the web3 industry and digital assets. Despite the imposition of a 30 percent crypto tax, the increasing adoption of decentralized financial platforms indicates a growing acceptance of alternative financial systems beyond traditional banking.

In a surprising move, India’s Financial Intelligence Unit (FIU) has lifted the ban on IPs associated with major crypto exchanges like Binance and Kocoin. This signals a more inclusive regulatory environment for crypto exchanges.

Tags: Crypto Regulations