Having explored all the possibilities, some of the crypto exchanges have reportedly made fresh recommendations to the finance ministry suggesting that International Financial Services Centres Authority (IFSCA) could be the right choice for the crypto regulations. However, most of the crypto exchanges Inc42 spoke to said no to the idea.
Notified under the IFSCA Act 2019, the International Financial Services Centres Authority is the 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. Currently, India has only one IFSC at GIFT City, Gujarat.
According to an ET report, suggestions have also been made regarding limiting individual holdings to the extent of $250,000 as mandated under the liberalised remittance scheme (LRS). However, this recommendation has not gone well with all the exchanges.
One of the exchange founders who wished not to be named told Inc42 that this is something that they would never endorse.
“This entire time we have been investing in educating Indians and the Indian market pertaining to crypto investments and the IFSCA regulation will then limit our presence in the Indian market. It will be costlier to trade in INR,” the person said.
Commenting on the report, Binance-owned crypto exchange WazirX founder and CEO Nischal Shetty said, “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.”
Ashish Singhal, cofounder and CEO of CoinSwitch Kuber in a previous conversation with Inc42 had highlighted that SEBI will be the right regulatory body for crypto. “You can’t equate it with any other industry. I personally think SEBI will be the right regulatory body as crypto should be regulated from an investment standpoint. SEBI can come up with rules and regulations similar to what it has in place for the stock market. When the crypto market evolves further, it (SEBI) can set up a separate body for regulation,” he said.
It is worth noting that being regulated under IFSCA will have its own pros and cons. Sathvik Vishwanath, cofounder and CEO of Unocoin said that this idea has been there.
“But, it will also dilute the concentration of the crypto industry which we have been trying to build in India. That’s definitely true. However, if India tries to go in the direction that is absolutely not favourable, this could be one of the options that could be explored.”
Earlier, suggestions were made to form a separate Digital Asset Regulatory Authority (DARO) to regulate digital assets like crypto in India. However, based on the RBI suggestions, the idea could not move further.
The Supreme Court has already struck down the RBI notification that had banned crypto in India, but, RBI Governor Shaktikanta Das reiterated that the central bank’s view on crypto has not changed and it continues to have its reservations.