The Chairman of the Securities And Exchange Board Of India, Ajay Tyagi, stated that domestic mutual funds should refrain from investing in any crypto-related offerings.
Tyagi further stated that unless a regulatory law has been introduced by the government that clarifies the current position of cryptocurrency-related activities in India, mutual funds cannot make such investments in crypto offerings.
Indian market regulator halts crypto-based NFOs
While speaking at a press conference, SEBI chief Ajay Tyagi further stated that domestic mutual funds should refrain from introducing crypto-related new fund offers (NFOs) until the government announces proper legislation to regulate cryptocurrency activities in India.
Tyagi’s comments have come after the matter concerning an asset management company called Invesco Mutual Fund. Despite SEBI’s approval, the company’s blockchain fund was delayed due to legislative concerns.
Tyagi’s statement on mutual funds implies that SEBI will not approve any blockchain or crypto fund until the government brings forth a standardized crypto law that efficiently governs crypto activities in India.
India’s crypto crisis
Initially, the Indian authorities were planning to introduce the crypto regulatory bill that intended to tax crypto assets and allow them to trade in a regulated ecosystem. The bill was scheduled to table in the parliament this winter but was postponed citing the government’s need to conduct “wider consultations” before introducing it in the parliament for further discussions.
There have also been intense debates on whether India should impose a blanket ban on private cryptocurrencies. Recently the Reserve Bank Of India also expressed its qualms regarding cryptocurrency trading in the country. According to the RBI’s Financial Stability Report, private cryptocurrencies “pose immediate risks customer protection and anti-money laundering (AML) and combating the financing of terrorism (CFT).”
“They are also prone to frauds and extreme price volatility, given their highly speculative nature. Longer-term concerns relate to capital flow management, financial and macro-economic stability, monetary policy transmission and currency substitution,” the report stated
Meanwhile, India has become one of the booming markets for cryptocurrency trading globally, with more than 15 million crypto investors. According to sources, India is among global leaders when it comes to cryptocurrency trading and has been ranked 2nd in a poll of nations that use cryptocurrency the most.
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