India’s market watchdog, the Securities and Exchange Board of India (SEBI), is teaming up with RBI on its crypto contentions.
In a recent response to a parliamentary standing committee on finance, SEBI mentioned that it would be “hard to regulate crypto”, because the computer nodes housing them are highly decentralised and globally scattered. In addition, it also proposed establishing a separate crypto regulator. Notably, SEBI was the government’s go-to choice for functioning as the crypto regulator last year.
For long, India’s apex bank Reserve Bank of India (RBI) has regularly voiced its issues with crypto. The RBI’s stand on this matter has remained consistently hostile and unrelenting over the last 3-4 years, ever since crypto vociferously burst on the Indian financial scene. Time and again, it has reiterated crypto’s adverse potential to “financially destabilise” and “dollarize the Indian economy”.
While there is still no clarity on the legality of cryptocurrency in India, the government wants to treat them as virtual digital assets (VDA), and not as currencies.
Setting a global precedent of sorts, the United States is taking vast strides in defining digital assets cryptocurrencies. They will be classified as commodities, akin to wheat, sugar and oil. A recent bill in this regard, presented by senators Kirsten Gillibrand and Cynthia Lummis, would empower the country’s Commodity Future’s Trading Commission (CFTC) to monitor crypto-related activities.
This continues in concurrence with their Security and Exchange Commission investigating exchanges like Binance and Gemini for potential security contract regulations.
Investor Protection
SEBI suggested that RBI oversee the money-laundering and KYC-related crypto procedures. And in order to protect investor interest, the Consumer Protection Act could be brought into play. The regulatory authority has always been extremely high on guarding investors from going mindlessly after celebrity crypto endorsements without doing adequate research of their own.
Just last month, it rapped and banned prominent celebrities and influencers from promoting “unregulated crypto”. If the celebrities are found at the forefront of a misleading advertisement or claim, they could be fined anywhere between Rs 10-50 lakh. They could also be banned from endorsing any other product for about three years.
However, many fin-fluencers on Instagram continue to make a case for crypto. Remember advertisements of Ayushmann Khurana and Ranveer Singh going gung-ho over investing in crypto last year?
While the ads were discontinued shortly after, some now think of a blanket ban as an extreme step. Like Ayush Shukla, who founded influencer marketing and talent management agency Finnet Media. “We are witnessing a really volatile crypto market right now. The Terra stablecoin fiasco has washed off a lot of money of a lot of people. Many have mindlessly invested in crypto without research and just due to FOMO [fear of missing out]. Till now, we came across numerous crypto promotions by various celebrities and brands. Hence, the steps taken by the SEBI and the RBI reflect their precautionary concerns which is justified. Although having regulations is a step forward, an outright ban on promotions is an extreme move in my opinion,” he notes.
On the other hand, some influencers like Anushka Rathod believe in adopting an education-first approach to crypto instead of out rightly pushing them as viable investment products.
“Crypto is still in its nascent stages. It requires one to be careful about the investments they are making and everyone should do thorough research before making any financial commitments in any space. Brands themselves and us as creators should take an education-first approach in this domain,” she says.
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