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Breaking: SEBI’s November Bulletin Highlights FCA and SEC’s approach to Cryptoassets

India’s Securities and Exchange board of India (SEBI) highlights reports of regulators on the other side of the world, the SEC and FCA in the new November Bulletin regarding their approach to cryptoassets and distributed ledger technology. 

Every month, SEBI, India’s securities and exchange regulator publishes a bulletin highlighting the developments in the securities’ market around the world and in India. 

The latest bulletin was published on November 26, 2018 highlighting the data and developments of October 2018. 

Within the “HIGHLIGHTS OF DEVELOPMENTS IN INTERNATIONAL SECURITIES MARKET” section of the bulletin, SEBI refers to the US SEC’s FinHub and UK FCA’s cryptoasset Taskforce. 

FinHub, the strategic Hub for Innovation and Financial Technology, announced by the SEC will “serve as a resource for public engagement on the SEC’s FinTech-related issues and initiatives, such as distributed ledger technology (including digital assets), automated investment advice, digital marketplace financing, and artificial intelligence/machine learning.”

UK’s FCA led Cryptoasset Taskforce on the other hand published its report on DLT and cryptoassets. In the report they warned investors to “be prepared to lose all the value they have put in” as cryptoassets have no intrinsic value per taskforce’s view. 

Both reports were published by the respective regulators in October and SEBI took note of it. This is important as SEBI is part of the Government of India appointed team deliberating on cryptoasset regulations, set up in December 2017.

India’s Approach to Cryptoassets

Cryptoassets have faced a lot of flak from regulators.

In February, the Finance minister clarified that the government does not consider cryptocurrencies as legal tender during his budget speech. Several agencies in the past have shown aversion for cryptoassets. 

The RBI kept on warning people to stay away from cryptocurrency from 2013 until 2017, it was in 2018 that they took some action. In April 2018, RBI pushed a circular banning banks from dealing with businesses and individuals who deal with cryptoassets.

However, recently, reports suggest that the agencies have been deliberating on cryptocurrencies and regulations. 

For instance, RBI’s research on Blockchain, cryptocurrencies, and the idea of central bank digital currency go back to 2016 but were highlighted in 2018. 

Income Tax Department published a book on cryptocurrencies and transaction examination in December 2017 for internal circulation. 

SEBI sent representatives for a study tour to Japan, Switzerland and the UK to learn about cryptocurrencies and ICOs. 

A committee setup in December 2017 under the DEA secretary Subhash Chandra Garg may soon be releasing a draft on regulations on cryptoassets as per reports. 

And finally, the supreme court has set January 15, 2019 as the date for hearing on cryptocurrency matter in court. 

Overall, it appears that the government and agencies are doing its bit in studying cryptoassets but it is still unclear what the final outcome will be. Nevertheless, it is heartening to see SEBI taking note of international decisions on cryptoassets, this may help frame regulations in India. 

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