Cryptocurrencies

The Securities and Exchange Board of India (SEBI) has suggested that several bodies should

The Securities and Exchange Board of India (SEBI) has suggested that multiple regulatory bodies should oversee cryptocurrency trading in the country, according to recently disclosed documents seen by Reuters.

The documents indicate that a department within India’s financial authorities should undertake regulatory oversight. In a separate document, the Reserve Bank of India (RBI) argued that cryptocurrencies pose a risk to the country’s macroeconomics.

Reuters said that government officials submitted the documents to a committee charged with advising the country’s Ministry of Finance on policy.

Instead of having a single regulator dealing with digital assets, SEBI recommended that different regulatory bodies collectively oversee digital asset activities that fall within their jurisdiction.

In this case, SEBI will monitor digital assets classified as securities and initial coin offerings (ICO), as well as issue licenses for financial products. Meanwhile, the Reserve Bank will oversee stablecoins backed by fiat currencies.

Cryptocurrency-related insurance will fall under the ambit of the Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority (PFRDA) will regulate pension matters related to digital assets. The Indian Consumer Protection Act should be applied to disputes between investors.

The country’s Reserve Bank has a more skeptical view on cryptocurrencies. According to sources familiar with the matter, the Reserve Bank of India supports the idea of ​​banning stablecoins. The agency also highlighted concerns that digital assets could facilitate tax evasion, and noted that decentralized peer-to-peer (P2P) transactions in cryptocurrencies rely on voluntary compliance, posing risks to financial stability.

The Reserve Bank of India is also of the view that cryptocurrencies may result in loss of income from money creation for central banks.

India is amending its regulatory framework to include digital assets. In December 2023, the country issued 15 notices of non-compliance to foreign cryptocurrency exchanges, blocking the companies’ URLs and mobile apps for local users.

At the time of this writing, KuCoin and Binance are the only exchanges able to obtain licenses from the Financial Intelligence Unit (FIU) to restart operations. The Indian government recently called on G20 members to join forces in regulating digital assets.

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