SEBI chief warns Indian mutual funds on investing in cryptocurrency offerings

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The Chair­man of the Secu­ri­ties and Exchange Board of India (SEBI) Ajay Tya­gi urged mutu­al funds to avoid invest­ing in cryp­to-relat­ed assets as the gov­ern­ment con­sid­ers new cryp­tocur­ren­cy rules. Speak­ing at a press con­fer­ence on Tues­day, Tya­gi advised firms to refrain from invest­ing in funds linked to cryp­to assets until there is clar­i­ty on the pol­i­cy and reg­u­la­to­ry framework.

“Those who have invest­ed in mutu­al funds, — in com­pa­nies relat­ed to cryp­to assets or for­eign firms through fund-of-funds (FOF) — my think­ing is that till we get clar­i­ty on its (cryp­to’s) pol­i­cy, busi­ness­es should not make such invest­ments,” said the SEBI chairman.

While the reg­u­la­to­ry envi­ron­ment for cryp­tocur­ren­cy in India is cur­rent­ly murky, the coun­try has already wit­nessed an expo­nen­tial rise in its pop­u­lar­i­ty. It’s also unclear if cryp­to invest­ments come with any tax oblig­a­tions in the country.

Tyag­i’s remarks come fol­low­ing the recent event involv­ing an asset man­age­ment firm (AMC), Invesco Mutu­al Fund. Despite Sebi’s approval, it delayed its blockchain fund last month owing to leg­isla­tive uncertainty.

There have been talks about cryp­tocur­ren­cy being dis­cussed in Par­lia­ment dur­ing the win­ter ses­sion recent­ly. The talks gained fur­ther momen­tum fol­low­ing a par­lia­men­tary stand­ing com­mit­tee on finance’s meet­ing with cryp­tocur­ren­cy stake­hold­ers to iden­ti­fy pos­si­ble oppor­tu­ni­ties and chal­lenges that may occur when it comes to cryp­to financ­ing and investment.

Relat­ed: Insti­tu­tion­al man­agers hold a record $72.3B of cryp­to — CoinShares

The Indi­an gov­ern­ment had for­mal­ly planned to intro­duce the Cryp­tocur­ren­cy and Reg­u­la­tion of Offi­cial Dig­i­tal Cur­ren­cy Bill, 2021, for debate in the par­lia­ment dur­ing its cur­rent win­ter ses­sion. The bill, how­ev­er, does not appear among the bills that Indi­a’s low­er house will con­sid­er as it con­cludes the win­ter session.

Mean­while, Indi­an Prime Min­is­ter Modi has been increas­ing­ly vocal regard­ing cryp­tocur­ren­cies in 2021. Dur­ing the recent Syd­ney Dia­logue, Modi urged demo­c­ra­t­ic nations to col­lab­o­rate in order to make the most of cryp­tocur­ren­cies and blockchain tech­nol­o­gy. He also warned against their mali­cious use.

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