Indian Securities Regulator Sends Officials to Japan, Switzerland and the UK to Study Cryptos

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A yellow taxi moves in front of Reserve Bank of India Calcutta office on May 30, 2018 in Calcutta, India. Source: shutterstock.com

After the Indian central bank, the Reserve Bank of India (RBI) penned a ban on banking services to crypto-related entities, Indian market regulator Securities and Exchange Board of India (SEBI) has geared up to study digital assets more effectively. The agency sent representatives to its peer agencies in Japan, Switzerland and the UK to study digital assets and initial coin offerings (ICO). Study tours were conducted with the Financial Services Agency (FSA) in Japan, the Financial Conduct Authority (FCA) in the UK and the Swiss Financial Market Supervisory Authority (FINMA) in Switzerland.

What Does India Seek to Gain?

In its annual report, SEBI suggests that the tours to Japan, Switzerland, and the UK were organized to interact with their respective financial regulators and get a better understanding of how cryptocurrency works in their respective countries, including the process behind it. The Indian market regulator believes that the knowledge transfer could help improve its existing process.

With a growing market for cryptocurrencies around the world, SEBI wants to understand the mechanisms of ICO and digital assets to formulate adequate regulations. Several crypto-related scams have been unearthed in India. The country’s biggest crypto scam was a crypto MLM scheme by Amit Bhardwaj, who reportedly duped investors of $300 million earlier this year.

Reserve Bank Comments on Digital Coins

Prior to SEBI, the Reserve Bank of India had already expressed interest in how other countries deal with digital currencies. It can be recalled that in its Annual Report 2017-18, the RBI also talked about regulations adopted in different countries, emphasizing on the rules adopted in South Korea and Japan.

In RBI’s annual report, the central bank talked about its concerns regarding cryptocurrencies. It writes:

“Though cryptocurrency may not currently pose systemic risks, its increasing popularity leading to price bubbles raises serious concerns for consumer and investor protection, and market integrity.”

RBI also mentioned that the crypto ecosystem could affect the current payments and settlement ecosystem. It also explained that since they are being stored in digital wallets, they could be subject to “hacking and operational risk.”

After India’s central bank banned banking services to crypto exchanges, these exchanges were forced to shift to a peer-to-peer model. RBI explains that lack of information in these “peer-to-peer anonymous/pseudonymous systems” could cause users to unintentionally violate anti-money laundering laws (AML) and laws for combating the financing of terrorism (CFT). The Financial Action Task Force has also observed links between digital assets and terrorist financing and money laundering.

RBI also commented that the subsequent move to P2P transactions could lead to the industry moving crypto exchanges to “dark pools,” creating further AML/CFT and taxation problems.

The Bank for International Settlements (BIS) has also warned about the appearance of cryptocurrencies in the market. According to the report, BIS perceives the emergence of cryptocurrencies as a combination of a bubble, a Ponzi scheme, and an environmental disaster.

RBI’s self-awareness over the consequences of its decision indicates that the country could see crypto regulations soon.

Indian Securities Regulator Sends Officials to Japan, Switzerland and the UK to Study Cryptos was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.