SEBI Bans Advisors From Advising On Cryptocurrency, Digital Gold
On 21st October, the Security And Exchange Board of India gave a major announcement to all the registered investment advisors. The regulatory board banned investment advisors from advising on unregulated instruments, which means that none of the registered advisors can advise on digital gold, cryptocurrencies or any other unregulated instrument in India.
Announcing the same, the market regulator said: “It has come to the notice of SEBI that some registered investment advisers are engaged in unregulated activity by providing a platform for buying/ selling/ dealing in unregulated products including digital gold. Investment Advisers are, hereby, advised to refrain from undertaking such unregulated activities,”
SEBI also mentioned that offering distribution, implementation, advisory or execution services in unregulated instruments don’t go in accordance with the provisions under Section 12 (1) of the SEBI act, 1992. It also added that any dealing in unregulated activities by any investment advisor might lead to action under the SEBI Act, 1992.
The announcement might come as a blow to the Indian cryptocurrency sector as more than 7.3% of Indians own crypto, which is the highest in the world. Even though the sector has a high adoption rate; the industry doesn’t have any legislative framework in India. However, there have been some reports suggesting that the central government might soon release a policy regarding the same.
When it comes to cryptocurrencies, there are a lot of centralized exchanges such as CoinDCX, CoinSwitch Kuber and Wazir X that caters to the need of Indian crypto-investors along with following all anti-money laundering norms and KYC. However, the country has reportedly banned more than 200,000 crypto-accounts citing that the accounts were a part of malicious activities in the last 6 months. Exchanges have also blocked accounts after suspecting tax evasion and fraud activities.
It remains to be seen how the Union government will regulate the cryptocurrency sector. There is a possibility of extreme policy action after the head of Rashtriya Swayamsevak Sangh (RSS), Mohan Bhagwat, said: “Clandestine, uncontrolled currency like Bitcoin has the potential to destabilize the economy of all countries and pose serious challenges,” While some people are against the concept of digital currencies, some are in favour of them.