SEBI open to oversight of crypto trade in contrast to RBI's stance: Report

Capital markets regulator SEBI has recommended that several regulators can oversee trade in cryptocurrencies, as per documents accessed by Reuters. This sharply contrasts RBI's stance that such private digital currencies pose a macroeconomic risk, as revealed in a separate set of documents also accessed by Reuters.

Trade in cryptocurrency

As per Reuters, both the set of documents are submitted to a government panel which is tasked with formulating policy for the finance ministry to consider. SEBI in its document has mentioned that different regulators should oversee activities linked to cryptocurrencies that fall under their domain and that a single unified regulator for digital assets should be avoided.

It further said that it could monitor cryptocurrencies that take the form of securities as well as new offerings called Initial Coin Offerings (ICO), issue licenses for equity market-related products, as per Reuters. It also recommended that RBI could regulate crypto assets that are backed by fiat currencies, while the grievances of investors trading in cryptocurrencies should be resolved under India's Consumer Protection Act.

Meanwhile, RBI continues to reflect the government's stance and is in favour of a ban on stablecoins. Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with fiat currencies so that they are less vulnerable to wild volatility.

RBI has said that cryptocurrencies could lead to tax evasion and that decentralised peer to peer (P2P) activities in cryptocurrencies would rely on voluntary compliance - both representing risks to fiscal stability. It went on to say that cryptocurrencies may lead to loss of "seigniorage" income, which is the profit earned by a central bank from money creation.

Cryptocurrency regulation

Meanwhile, since 2018, the Indian government has taken a tough stance against trade via cryptocurrency when the RBI had prohibited lenders and other financial intermediaries from dealing with crypto users or exchanges. However, the move was later struck down by the Supreme Court.

In 2021, the government prepared a bill that would have banned private cryptocurrencies though it has not been introduced and during the G20 meet last year, it called for a global framework to regulate such assets.

As per Reuters, the panel plans to firm up its report as early as June.

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