India’s SEBI proposes distributed supervision of cryptocurrencies, RBI expresses concern

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India’s Securities and Exchange Board of India (SEBI) has released guidelines for regulating cryptocurrencies in the country, proposing a distributed approach involving multiple regulators.

Here are the key points:

1) Distributed supervision: SEBI proposes creating a unit within India’s financial authorities to coordinate the supervision of cryptocurrencies. Different regulators will oversee aspects that fall under their jurisdiction.
2) SEBI: Will regulate cryptocurrencies classified as securities and initial coin offerings (ICOs) and license cryptocurrency-related financial products.
3) Reserve Bank of India (RBI): Will oversee stablecoins backed by fiat currency.
4) Other regulators: The Insurance Regulatory and Development Authority of India will control insurance related to cryptocurrencies, and the Pension Fund Regulatory and Development Authority will regulate pension issues related to digital assets. India’s Consumer Protection Act will apply to disputes between investors.
5) RBI’s position: The RBI has expressed concerns about the risks associated with cryptocurrencies, including tax evasion, impact on fiscal stability, and loss of money creation revenue. The bank is in favor of a ban on stablecoins.
6) Current status: In December 2023, India issued warnings to 15 foreign cryptocurrency exchanges, and KuCoin and Binance are the only exchanges that have received licenses from the financial intelligence agency.
7) International cooperation: India calls on G20 members to join forces in regulating digital assets.

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