SEBI said that the government could look into a special regulator for cryptocurrencies.- SEBI hasn’t proposed a ban and is expected to be one of the regulators for digital asset trading.
- The SEBI and
RBI are the two most important financial regulators in India.
In a response to a Parliamentary Standing Committee on Finance on June 6, the SEBI said that the decentralized nature of cryptocurrencies makes them harder to regulate.
“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,” the regulator said.
The good news for the crypto community though is that the SEBI hasn’t sought a ban on cryptocurrencies, like some other lawmakers. Instead, the regulator urged the committee that “crypto assets related unregulated activities may be entrusted to an investigating authority appointed by the government and take further legal action.”
To be sure, the securities regulator is expected to play a critical role in the future regulation of cryptocurrencies in India. In December 2021, reports indicated that the government was going to put crypto assets under the regulatory purview of the SEBI.
In its response to the committee, SEBI said that different regulators are regulating various entities based on services and products offered right now, and the government could look into setting up an entity for cryptocurrencies as well, since digital assets don’t fall under a specific regulatory entity right now. Consumers, on the other hand, should be protected under the Consumer Protection Act of 2019, according to the SEBI.
Crypto regulations in India have been a matter of debate for over a year now. A possible bill to regulate the trading and use of crypto regulations first showed up on the docket for the Budget Session of the Parliament in February last year. But even before that, in 2017, the Indian government had banned the import of ASIC machines used for mining crypto.
The bill mentioned above showed up on the agenda for the December session of the Parliament too last year, but was never brought up. It raised questions about the government planning a possible ban on crypto, though those fears have been alleviated since then, especially since the government announced taxes for income from digital assets earlier this year.
In the Budget session of the Parliament in February 2022, Finance Minister Nirmala Sitharaman announced that the government would levy a 30% tax on capital gains from crypto trading, and a 1% tax deduction at source has also been levied since April 1.
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