The decentralized nature of crypto makes regulation difficult cryptoblog

India’s market regulator, the Securities and Exchange Board of India (SEBI), says the decentralized nature of cryptocurrencies makes consumer protection and regulatory enforcement difficult.

SEBI on cryptoregulation

The Securities and Exchange Board of India (SEBI) has reportedly told the Parliamentary Standing Finance Committee that the decentralized nature of cryptocurrencies makes it difficult for any consumer protection or regulatory enforcement of this asset class.

SEBI was quoted by local media as noting that “cryptographic assets are stored in decentralized distributed ledgers,” he said:

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There is a high probability of carrying out unauthorized transactions that do not comply with a legal framework.

The market regulator highlighted the need to clarify whether cryptocurrencies are securities. “If cryptocurrencies are not banned, then there is a need to characterize the tokenized version of assets based on functionality, which can enable the supervision of various industry regulators,” SEBI noted.

The regulator explained that there could be more than one crypto regulator and noted that different aspects of the crypto industry could be monitored by different regulators.

SEBI clarified that consumer products must be protected by the Consumer Protection Act. The Reserve Bank of India (RBI) could also regulate crypto-trading platforms under the Foreign Exchange Management Act (FEMA). SBI added:

A digital currency acts as a bridge between the fiat currency of the foreign jurisdiction and the Indian rupee.

The market regulator explained that SEBI-regulated exchanges cannot redeem cryptocurrencies without declaring securities. The Authority noted that under Section 2 (j) of the SCRA, 1956, “a stock exchange may only provide” assistance, regulation or control over the purchase, sale or trading of securities “.

SEBI had also proposed several measures to the Advertising Standards Council of India. Last month, SEBI proposed banning celebrities and public figures from licensing cryptocurrencies.

While crypto income and transactions are taxed in India, the government has not yet introduced a regulatory framework for crypto assets.

Ministry of Finance officials consulted with the World Bank and the International Monetary Fund (IMF) on cryptocurrency regulation. The country’s finance minister has said the government will not rush to come up with a crypto policy. The government is currently finalizing a consultation document on crypto.

What do you think of SEBI’s comments? Tell us in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects and the intersection between economics and cryptography.

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