SEBI and RBI Diverge on Crypto Regulation in India

Core Viewpoint - The debate over cryptocurrency regulation in India reveals a significant divide between the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), with SEBI open to oversight while RBI opposes legitimizing digital assets [1][6] Regulatory Perspectives - The RBI argues that regulating cryptocurrencies may inadvertently legitimize them, posing systemic risks to the financial system, and highlights challenges posed by the decentralized nature of digital assets [2][5] - SEBI is willing to regulate crypto assets that resemble securities, proposing a multi-agency framework for oversight, which aligns with international regulatory models [3][5] Policy Landscape - India has not yet established a comprehensive law for cryptocurrencies, limiting actions to taxation and anti-money laundering measures, with a legislative framework stalled due to RBI's resistance [4][5] - The lack of clarity on regulatory authority creates uncertainty for investors and firms, hindering expansion and investment in the crypto sector [5][6] Global Context - India's regulatory stance is under global scrutiny due to its large retail investor base and potential influence on how emerging markets balance financial innovation with systemic stability [6]