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India’s Securities Regulator Tight-Lipped on Crypto Regulation, Inquiry Reveals

Last Updated March 4, 2021 3:47 PM
Yashu Gola
Last Updated March 4, 2021 3:47 PM

The Securities and Exchange Board of India (SEBI) recently responded to some 68-questions about crypto asked by a New Delhi-based legal agency.

The response  came under the pretext of a Right-to-Information (RTI) act that allows citizens to request information from a public authority. Blockchain Lawyer filed an RTI application to SEBI seeking knowledge on various aspects of crypto regulation, including their official stance, recently study tours and the outcomes of internal meetings over the proposed crypto law so far.

According to Varun Sethi, a legal counselor at Blockchain Lawyer , SEBI didn’t provide straightforward answers to a majority of their questions, citing confidentiality. A copy of the response revealed many instances in which the regulator ducked questions that could have clarified the current status of crypto regulation in India.

SEBI, for instance, didn’t reveal its research data that could be the base for the future crypto law. The regulator explained that releasing such information could “affect its strategic decision-making process.” Considering it was important for local blockchain industry to understand the source of their research, which the regulator claimed to have drafted after taking “personal views” of its officers, the decision to withhold information from them didn’t go well.

At the same time, the RTI response also hid some critical details about the SEBI’s widely-covered blockchain study tour. The regulator had sent just three of its officers to crypto-friendly countries like Switzerland and Japan. But it refused to disclose the outcome from the said tours, telling that “the disclosure of such strategic and confidential information may also affect and compromise the interests of the securities market in specific and may impact the economic interests of the country.”

The RTI also found that SEBI had conducted an internal meeting on the topic ‘Bitcoin and Blockchain’ on October 30, 2017. It has been reported previously that the regulator was attempting to pass the burden of crypto regulations to RBI by treating it as a  currency asset. The central bank took drastic actions this year by banning banking support to cryptocurrency-focused companies, including exchanges.

After almost a year since the meeting, both SEBI and RBI still have not concluded the status of cryptocurrencies in India. Furthermore, their lack of transparency in response to the RTI is raising more doubts, as far as preparedness is concerned.

Sethi in its statement to CCN.com confirmed that it would file an appeal in response to the SEBI’s unsatisfactory answers to the Indian crypto community. He said:

“Our primary thoughts are concerned with some claims in the reply. Like experts hired to speak, three officers sent abroad to understand blockchain, internal meeting in Oct 2017 about blockchain. But what is also concerning is lack of transparency in responses. Our next step shall be filing an appeal.”

Featured image from Shutterstock.