The Securities and Exchange Board of India (SEBI) is reportedly planning to impose a “crypto-ban” of sorts on promoters looking to raise money for their venture via a public offering. SEBI has proposed to prohibit IPO holders from holding any kind of cryptocurrency as per a report published in The Economic Time. The report suggests that SEB is already communicating with merchant bankers, securities lawyers, and even company executives involved with the IPO process about the possible ban on holding crypto assets.
The need to ban promoters from holding cryptocurrencies seems to have arisen from the alleged government’s plans of banning private cryptocurrencies. While most of the developed nations are looking for ways to incorporate and regulate crypto, the Indian government’s proposed plan of a complete ban has drawn a lot of criticism from all across the globe some even comparing it to banning the internet.
A security lawyer working on different IPOs at the moment commented on the proposed decision by the SEBI on condition of anonymity and said,
“There could be a direction from the government in this regard. The market regulator seems to think that this could become a risk for investors if a promoter holds an asset that is illegal in the country,”
Indian Crypto Ban Would be Like Banning Internet
The rumors of a possible blanket ban arose after the crypto bill was tabled during the recently concluded budget session. The government in the bill is referring to an interministerial committee report developed back in 2018 which has proposed a blanket ban. While the government and its spokesperson have claimed that the bill will be passed with the best interest of the citizens in mind, it seems the state is quite determined in banning any cryptocurrency not issued by the state.
Earlier, the central bank of India RBI had put a banking ban quite similar to the Nigerian banking ban but the decision was challenged and overturned by the Supreme court of India in March last year. This gave a new lease of life to the Indian crypto entrepreneurs who had to shut their operations and within a year the Indian crypto ecosystem has grown into a multi-billion dollar industry. However, the proposed ban threatens to kill a budding industry that can turn into a cash cow for the government in the form of taxation.
There are approximately 40 million Demat accounts in India (= number of investors in regular stock markets) that's been there for many decades now.
The rate of crypto adoption will be much faster in India. In the past couple of years, there have been around +7.5 million users.
— Sumit Gupta (CoinDCX) (@smtgpt) February 16, 2021
Recent data suggested that India has nearly 7.5 million trading accounts and the crypto industry has seen investments in upwards of 10,000 crores equivalent to a $13 billion dollar industry. With a population of 1.3 billion where the majority falls in the youth age group, India could become a true crypto player with the right government support or might miss the opportunity just like during the internet boom in the late 90s and early 2000s.
75 lakh people, Rs10,000cr invested in crypto in India: CoinDCX CEO on CNBC. Interesting. 75L is huge. 75L is like the monthly retail traders+investors in India cc @Nithin0dha
— Anupam Gupta (@b50) February 12, 2021
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