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The SEBI (Securities and Exchange Board of India) has clearly communicated to RIAs (registered investment advisers) to refrain from indulging in ‘digital gold’ activities. The warning issued by SEBI makes it unlawful for the RIAs to partake in such activities which involve “unregulated products.” The cryptocurrency industry in India is still not officially regulated.

An official SEBI press release specifies directions pertaining to “dealing in unregulated products by SEBI registered Investment Advisers.”

SEBI specifically stated the following in the said press release:

It has come to the notice of SEBI that some registered investment advisers [RIAs] are engaged in unregulated activity by providing a platform for buying/ selling/ dealing in unregulated products including digital gold.

SEBI clarifies that “Undertaking such unregulated activity including dealing (i.e. advisory, distribution and execution/ implementation services) in digital gold by investment advisers is not in accordance with the provisions of Section 12(1) of the SEBI Act 1992, read with the SEBI (Investment Advisers) Regulations 2013.”

Advising the RIAs on the matter, SEBI stated:

Investment advisers are, hereby, advised to refrain from undertaking such unregulated activities. Any dealing in unregulated activities by investment advisers may entail action as deemed appropriate under the SEBI Act, 1992 and regulations framed thereunder.

The Cryptocurrency Bill of India is awaiting a green signal from the Cabinet, to then be tabled in the Parliament of India. What specifically accounts to and not to be a valid cryptocurrency in the context of the Bill needs to be clearly mentioned. Based on this clarity, the tax and regulatory affairs for the cryptoverse would be easier to introduce and implement.

The Reserve Bank of India (RBI) is bracing to launch the Central Bank Digital Currency (CBDC) by Q4 2021. Cryptocurrencies are, however, far away from being allowed to be valid payments tender in India. It would either be categorized as a digital asset or a commodity.

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