Regulation
RBI, SEBI Join To Develop India Crypto Policy, Paper Due In Q3
India Crypto Policy: The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have joined an inter-ministerial group tasked with formulating a comprehensive crypto policy. This collaboration marks a potential turning point in their stance on cryptocurrencies, with a discussion paper outlining the government’s position expected to be released in the third quarter of 2024.
India Crypto Policy Development & Regulatory Collaboration
India’s financial regulators, RBI and SEBI, are joining forces with other government bodies to develop the India crypto policy. Economic Affairs Secretary Ajay Seth revealed in an interview that a discussion paper outlining their stance on cryptocurrencies is expected to be released before September 2024.
The paper aims to gather input from stakeholders on potential regulations for India crypto policy. Seth explained that the current regulatory approach focuses solely on anti-money laundering (AML) and counter-terror financing (CTF) measures, which were extended to crypto assets and intermediaries in March 2023.
An inter-ministerial group, including the RBI and SEBI, is working on a broader policy framework. This development follows their G20 presidency in 2023, during which member countries endorsed guidelines set by the International Monetary Fund (IMF) and the Financial Stability Board (FSB).
The discussion paper will address key questions about policy stance and regulatory scope. It comes amid conflicting views within Indian authorities, with SEBI reportedly open to allowing private virtual asset trading, while the RBI maintains concerns about macroeconomic risks.
This initiative marks a significant step in their approach to cryptocurrencies, following the Supreme Court’s 2020 decision to strike down the RBI’s 2018 ban on crypto-related financial services. The government’s stance has evolved since 2021 when a bill proposing a ban on private cryptocurrencies was drafted but never introduced.
The upcoming discussion paper is expected to align with the G20-endorsed IMF-FSB framework, which advises against blanket bans on crypto activities. This development signals their move towards a more nuanced and potentially inclusive approach to cryptocurrency regulation.
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Divergent Regulatory Views and Market Impact
SEBI has shown openness to allowing private virtual asset trading, recommending multiple regulators oversee crypto trading nationwide in May. This stance contrasts with the RBI’s historically tighter grip on cryptocurrencies and its ongoing concerns about macroeconomic risks.
However, SEBI’s recommendation has gained significant traction among crypto market participants, potentially signaling a more inclusive approach to cryptocurrency regulation. This development has created a state of anticipation in the market, as it represents a potential shift from the RBI’s longstanding restrictive stance on cryptocurrencies.
The upcoming discussion paper and the resulting policy framework are expected to navigate these differing viewpoints and establish a balanced approach to cryptocurrency regulation in the country.
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