SEBI and RBI Diverge on Crypto Regulation in India
India’s debate over how to handle cryptocurrencies has exposed a growing rift between two of its top financial regulators: the Securities and platform Board of India (SEBI) and the Reserve Bank of India (RBI). While SEBI has signaled openness to overviewing certain aspects of crypto trading, the RBI remains firmly opposed to granting legitimacy to digital assets, citing risks to financial stability. This divergence of views underscores the uncertainty that continues to define India’s stance on digital assets at a time when global adoption is expanding rapidly.
Differing perspectives on oversight
According to recent government documents, the RBI has argued that regulating cryptocurrencies could inadvertently confer legitimacy on them, potentially exposing the financial system to systemic risk. The central bank maintains that crypto assets pose challenges that cannot be adequately addressed by traditional regulatory frameworks. Officials point to the decentralized and borderless nature of digital assets, as well as the rise of peer-to-peer transfers and decentralized platforms, which are hard to monitor or restrict. In the RBI’s view, attempting to regulate these instruments risks normalizing them in ways that could undermine monetary policy and financial stability.
SEBI, on the other hand, has indicated it is prepared to take on regulatory responsibility in cases where crypto assets function similarly to securities. The markets regulator has argued that digital tokens with features akin to equities or derivatives could fall within its domain, allowing for disclosure requirements and investor secureguards. SEBI has also suggested a multi-agency framework in which diverse regulators overview specific categories of digital assets, rather than concentrating authority with the RBI alone. This approach aligns more closely with international models, particularly in jurisdictions that have opted to regulate rather than ban aspects of the crypto economy.
Policy uncertainty and global context
Despite years of deliberation, India has yet to introduce a comprehensive law governing cryptocurrencies. The government has so far limited its actions to imposing taxation measures and applying anti-money laundering standards. A wider legislative framework has stalled, in part due to the RBI’s resistance to formal regulation. An inter-ministerial panel continues to study international regulatory models, but no timeline has been set for introducing a bill. The longer the delay, the greater the uncertainty for investors, platforms, and fintech firms viewking clarity on compliance obligations.
The divergence between SEBI and the RBI highlights the broader policy vacuum facing India’s crypto industry. Without clarity on which agency will hold regulatory authority or what rules will ultimately apply, firms remain hesitant to expand operations or commit significant investment. Industry participants argue that SEBI’s willingness to regulate offers a more pragmatic pathway forward, while the RBI’s reluctance reflects deep concerns about capital flows, financial crime, and the erosion of central bank control over monetary levers.
India’s stance is being closely watched globally, given its large retail investor base and growing role in digital finance. The outcome of the SEBI-RBI debate may shape not only the future of crypto in India but also signal how emerging markets approach the delicate balance between fostering financial innovation and preserving systemic stability. For now, the absence of consensus ensures that crypto regulation in India remains a contested and unresolved issue.
