SEBI echoes RBI woes on crypto, calls for regulation 

The Securities and Exchange Board of India (SEBI) underlined the Reserve Bank of India's worries regarding cryptocurrencies. Due to the decentralised structure of the digital instruments, consumer protection and the enforcement of any regulatory regime over crypto assets would be difficult, according to the market regulator.

SEBI told the Parliamentary Standing Committee on Finance earlier this week, “As crypto assets are maintained in decentralised distributed ledgers, which are nested in computer nodes spread all across the globe, there is a great likelihood of execution of unauthorised trades not in consonance with any regulatory framework.”  

Although the market regulator has not called for an outright ban on cryptocurrencies in India, they clarified, “considering the spread of the opportunity to deal with crypto assets, crypto assets related unregulated activities may be entrusted to an investigating authority appointed by the government and take further legal action.” 

Additionally, the market regulator stated that it is necessary to determine if cryptocurrencies may be legally classified as securities.  

SEBI highlighted, “If crypto assets are not banned, then there is a need for feature-based characterisation of the tokenised version of the asset, which may attract supervision of different sectoral regulators.”  

If a legislative framework is to be presented, the regulatory body has recommended that the duties of various regulators and authorities, especially for regulatory purposes, be clearly stated. SEBI further stated that different businesses are now governed by different bodies depending on the services and goods they supply.

It was argued that the Consumer Protection Act of 2019 should safeguard purchasers of such products. 

It further advised that the RBI regulate crypto trading platforms under the FEMA because crypto assets can be traded in foreign jurisdictions and consumers can send money to India using such a currency. 

SEBI had also proposed numerous measures to the Advertising Standards Council of India as part of its client protection efforts. 

While the government has implemented a taxation mechanism for virtual digital assets, their regulation remains unclear. The administration has also stated that the tax plan does not make cryptos legal.