RBI, SEBI Collaborate To Develop India Crypto Policy, Paper Due In Q3

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As a long-term crypto investor with a keen interest in the Indian market, I am encouraged by the recent collaboration between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to formulate a comprehensive crypto policy. This development is significant because it marks a potential shift in the regulators’ stance on cryptocurrencies, moving away from their historically restrictive approaches.

India’s Approach to Cryptocurrencies: The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have teamed up with other ministries to create a policy for cryptocurrencies. This cooperation signifies a possible shift in their perspective towards digital currencies, as a proposed paper detailing the Indian administration’s viewpoint is anticipated to be unveiled during the third quarter of 2024.

India Crypto Policy Development & Regulatory Collaboration

India’s financial regulatory bodies, the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI), are collaborating with other government institutions to formulate a crypto policy for India. According to Economic Affairs Secretary Ajay Seth, a draft document expressing their viewpoint on cryptocurrencies is anticipated to be made public prior to September 2024.

The objective of the paper is to elicit views from various parties concerning prospective regulations for cryptocurrency in India. Seth highlighted that the existing regulatory framework primarily centers around AML and CTF controls, which have been applied to crypto assets and their intermediaries since March 2023.

A collaborative team consisting of the RBI and SEBI is currently engaged in formulating a more comprehensive policy structure. This initiative arises from India’s presidency of the G20 in 2023, which saw the endorsement of financial guidelines proposed by the International Monetary Fund (IMF) and the Financial Stability Board (FSB).

The discussion paper aims to tackle fundamental issues regarding policy position and regulatory boundaries. This release arises during debates among Indian decision-makers, as SEBI is said to favor permitting private virtual asset trades, whereas the RBI remains apprehensive over potential macroeconomic hazards.

Based on my extensive knowledge and experience in the financial industry, I can tell you that this recent move by the government is a significant shift in their stance towards cryptocurrencies. Having closely followed the developments in this space since the Supreme Court overturned the RBI’s 2018 ban on crypto-related financial services, I have observed how the government’s position has evolved.

The forthcoming discourse is predicted to resonate with the IMF-FSB framework, backed by the G20, which discourages complete prohibitions on crypto transactions. This shift suggests a more refined and possibly welcoming stance towards cryptocurrency legislation.

Divergent Regulatory Views and Market Impact

SEBI has expressed a willingness to permit private virtual asset trading and suggested the involvement of several regulatory bodies for overseeing crypto transactions across India, as announced in May. This approach is distinct from the RBI’s long-standing control over cryptocurrencies and their persistent worries about potential macroeconomic hazards.

SEBI’s proposal regarding cryptocurrencies has generated considerable interest among market players, implying a possible more welcoming regulatory attitude towards digital currencies. This situation has sparked excitement in the industry, as it could mark a turn from the RBI’s persistent restrictive stance on cryptocurrencies.

In the forthcoming discourse, we anticipate finding a fair and equitable solution for regulating cryptocurrencies within the nation, taking into account various perspectives and striking a balance between them.

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2024-07-25 14:06