Indian cryptocurrency exchanges have sent fresh recommendations to the government suggesting the finance ministry to consider Gujarat’s International Financial Services Centres Authority (IFSCA) as a likely regulator for all crypto transactions, as first reported by the Economic Times. Earlier, the exchanges have suggested SEBI to be designated as a crypto regulator.
India currently has one IFSC at GIFT City. IFSCA set up under the IFSCA Act 2019 is a unified regulatory body to regulate financial products such as securities, deposits or contracts of insurance, financial services, and financial institutions that are set up in an IFSC.
Suggestions have also been made regarding limiting individual holdings to the extent of $250,000 as mandated under the liberalised remittance scheme (LRS) as per the ET report. The industry had earlier suggested setting up a separate Digital Asset Regulatory Authority (DARO), but the idea did not receive a favourable response from the government. The idea is also to have a cohort based regualtory authority that can co-ordinate with with RBI and SEBI based on the nature of the activity – trading and use as a currency.
“However, currently the IFSCA’s regulatory purview is only limited to GIFT City. There would be several statutory amendments required to enable the regulatory function for IFSCA to monitor crypto exchanges. More clarity will be offered once the government comes out with its new crypto bill,” ET reported quoting an industry source.
Commenting on the report, Binance-owned crypto exchange WazirX founder and CEO Nischal Shetty said Inc42, “This is not the industry view. It could be either SEBI or a combination of RBI and SEBI; but, we will have to wait until there is clarity from the government.” It may be noted that WazirX is the largest Indian crypto exchange.
Coming under IFSCA would also limit the operations of the exchanges as IFSC entities have limitations in taking up domestic business activities. Sathvik Vishwanath, cofounder and CEO of Unocoin had also expressed similar views as that of Mr. Shetty. Currently, the government is working on a crypto regulation bill to regulate the industry. The bill is currently pending for cabinet approval.