India’s Securities and Exchange Board of India (SEBI) is advocating for a distributed approach to cryptocurrency oversight, proposing a multi-agency regulatory framework.

According to official documents, SEBI has recommended that various regulators collaborate to oversee the cryptocurrency sector within the country. These suggestions were presented to an advisory panel for India’s finance ministry.

Under this proposal, SEBI would be responsible for monitoring cryptocurrencies classified as securities, overseeing initial coin offerings, and issuing licenses for related products. Crypto-related insurance cases would fall under the jurisdiction of the Insurance Regulatory and Development Authority of India. Additionally, the Pension Fund Regulatory and Development Authority would regulate pension-related matters involving cryptocurrencies.

The proposal also recommends applying the nation’s Consumer Protection Act to address investor disputes. The Reserve Bank of India (RBI) was suggested as the overseer for fiat-backed stablecoins, although the RBI has shown skepticism towards cryptocurrencies.

Sources familiar with the situation indicate that the RBI favors an outright ban on stablecoins, citing concerns about tax evasion. The agency has also warned that decentralized peer-to-peer transactions in cryptocurrencies depend on voluntary compliance, posing risks to financial stability.

“This development marks a significant first step toward creating domestic legislation for the sector […] The proposal to form an inter-ministerial body to manage Virtual Digital Assets (VDAs) aligns well with the industry’s aspirations, given the diverse applications of these assets,” said Dilip Chenoy, chairman of the Bharat Web3 Association (BWA).

Chenoy added that the government has sought industry input to help shape the nation’s regulatory approach, and the BWA is currently drafting a comprehensive document to this effect.

In this context, Indian regulators are pushing for foreign cryptocurrency service providers to be licensed under the Financial Intelligence Unit (FIU). At present, only a few companies have complied with these requirements.

The FIU has also been active in initiatives aimed at promoting compliance among market participants in the nation. Speaking at a recent capacity-building and training workshop for Virtual Asset Service Providers (VASPs), FIU Director Vivek Aggarwal emphasized the importance of adhering to the Anti Money Laundering / Countering the Financing of Terrorism (AML/CFT) framework.

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