Cryptocurrencies can no longer be ignored: Sebi

Mumbai: While stating that virtual currencies like Bitcoin has not posed any systemic risk till date, Sebi chairman however said that the government is holding discussion with the Reserve Bank (RBI) and the market regulators about how to regulate cryptocurrencies. “On the issue of bitcoins, the government is looking into it in consultation with the RBI and Sebi. The panel, also consisting of finance and information technology ministries, is looking into what to do about it,” said Ajay Tyagi, chairman, Sebi while interacting with reporters on the sidelines of a financial market summit organised by the industry body CII.  

Currently, India doesn’t have any proper law to regulate the issue and trading of cryptocurrencies.  “There has to be a process or law, only then can you take action,” Mr Tyagi added. Earlier this month, in the wake of significant spurt in the valuation of many virtual currencies and rapid growth in Initial Coin Offerings (ICOs), RBI had reiterated its concern regarding the potential economic, financial, operational, legal and security-related risks associated with such currencies. 

According to it, virtual currencies being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials and malware attack among others. Since they are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in the permanent loss of the VCs held in them. 

The Sebi chief also said that the regulator is not looking at taking up too many cases for punitive action, rather it aims at taking action only in such cases where strong action is merited. “There is a need for a balance to be maintained between investor protection and punitive action,” he said. Terming the current year as ‘excellent’ for capital markets in India, he said, the amount of funds raised through primary market in 2017 rose by more than the total amount raised in the previous six years. This according to him is the result of enhanced confidence of investors due to reforms and effective regulatory regime.