By Lucas Williams
The supervisory authority of financials, companies, advisors and securities of India namely Securities & Exchange Board of India (SEBI) has issued a warning aimed towards stopping the licensed Indian investment advisers not to render any investment advices involving cryptocurrencies or virtual assets. The warning will also be implementable upon anyone engaged in any crypto activities because the digital asset industry of India is still without any regulation at all.
A notice, on the subject “unregulated products”, has been issued on 21st October, 2021 by Securities & Exchange Board of India (SEBI).
SEBI is the principal regulator which looks after the affairs of financials, licensed companies/organizations, licensed advisers and accountants of India. The 21st October’s notice of SEBI has been addressed particularly to the licensed investment advisers of India. The regulator has noticed that some of the Indian investment advisers have been advising on the investments of cryptocurrencies and digital assets. The regulator has termed crypto advisory services as being “unregulated activity” involving trade dealings of “unregulated products”. SEBI has suggested to the advisers that they cannot, in any way, advice anyone or recommend any platform for such activities.
SEBI told specifically that if advisers are found rendering such services then they would be violation the regulators Act of 1992. Advisers have been warned that they would be acting in violation of Section 12(1) of the Act, warned SEBI. In addition, they would be acting in contravention to the 2013 Regulations issued by SEBI particularly for the Indian investment advisers.
At the end of the notice, SEBI have estopped advisers forthwith to refrain themselves from rendering their advisory services. They are not allowed under the law to advice on unregulated products and activities. Consequently, SEBI will be forced to take all proper and necessary steps to ensure compliance of the respective laws. The action may involve filing of appropriate proceedings before the regulator as well as before the Indian Courts, clarified SEBI.
Considering the contents of the notice, it is quite visible that SEBI has deliberately did not make mention of the word “crypto”. Instead of “crypto” or “digital assets”, the words used are “unregulated product/asset” or “unregulated activity”. The only reason for doing this deliberate non-mentioning of the word “crypto” seems to be because there are no crypto regulations in India.
Though the Indian digital asset industry is huge, however, it still remains totally unregulated. But the law on crypto is under preparation which has been many times re-confirmed by the country’s Finance Minister. Nirmala Sitharaman, who is the Federal Finance Minister of India, had told the press that the bill is due for Cabinet’s consideration. At the same time, the Government of India was also amending its tax laws with the perspective of crypto as well. In addition, Reserve Bank of India is also working on the national digital currency project too.