India has not made any firm decision over the regulation of cryptocurrencies in the country. However, it has been noted that the Securities and Exchange Board of India [SEBI] will be taking up the tasks of regulating it. Keeping up with the assigned task, the commodity markets watchdog warned the mutual funds to wait before they come up with new fund offers [NFOs] based on crypto assets.
As per reports, SEBI Chairman Ajay Tyagi stated that mutual funds should not be making such investments until there is a law in place to regulate the crypto industry. However, the winter session of the Indian parliament just ended without any decision on the crypto draft bill.
As the process of regulation is delayed further, it was prudent for regulated entities with public markets exposure to wait for additional clarity, per Nitin Sharma at Antler India and blockchain lead for Antler Global.
Sharma noted in an interview,
“It is prudent for regulated entities with public markets exposure or focus, or any form of public solicitation, to wait for additional clarity regarding the legality or definition of digital assets as assets or securities or commodities in India.”
This warning of the regulators comes after asset management company Invesco Mutual Funds postponed its plan to launch its blockchain fund. This was done due to a lack of clarity and legislative uncertainty. However, the firm already has received a green light from SEBI and could take steps in the direction soon.
Sharma added,
“A lot of HNIs, family offices, and retail investors will be drawn to such options because they are more comfortable with indirect exposure right now, even at a cost, versus dealing directly with digital assets.”
With crypto’s market capitalization reaching $2.5 trillion, the crypto market was not going to wait for nations to come on board. Instead, it was going to expand and it will the country’s deciding whether they wanted to hop on for the ride. A similar sentiment was shared by WazirX’s CEO, Nischal Shetty. In an interview, Shetty noted,
“The question for every nation is: Do they want to participate and get a share of this pie?”
Predicting the adoption of crypto reaching 400 million if the coming year followed the 2021 trajectory, Shetty believed the upcoming Web3 craze could open gates for innovation and more startups in India. The regulators may want to strap their boots for the oncoming tech wave.