SEBI, which is the Securities and Exchange Board of India, has maintained its distance from the cryptosphere. SEBI is skeptical about how things would roll out if cryptos were legalized or the market was allowed to move freely in the country. A portion where it remains undeterred is with the promotion of CBDC (Central Bank Digital Currency) by the Reserve Bank of India, or RBI.
However, Madhabi Puri Buch, the SEBI Chief, said that there is a way in which the crypto space may gain traction if the traditional market does not gear up. Buch has identified that the crypto industry enables users to leverage instant settlements along with tokenization. If not instant, then settlements are near-instant based on the volume of transactions.
That poses a challenge to the traditional sphere because users will eventually be inclined to an alternative where transactions are finalized faster. For reference, many countries take up to 2 days to settle a transaction. Cross-border transactions can have more hindrances. Cryptos reach the final step of a payment or securities trade faster.
Therefore, plans are underway to offer people something similar, such as becoming the second country to do so after China. It is tentatively slated to be launched in March next year, that is, in 2025, subject to approval from the SEBI Board. If approved, SEBI will move forward with offering instant settlements.
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Buch also addressed the fact that foreign portfolio investors have been talking about operational complexities when it comes to moving their funds to comply with faster settlement cycles.
SEBI appears to be actively preparing to contend with cryptocurrencies; however, the Board previously declared its intention to investigate blockchain technology. The aim of the investigation was to examine the technology and ascertain its potential utility in relation to regulatory oversight processes. An endeavor to examine the implementation of innovation in asset management, post-trade settlement, and fundraising was declared a Fintech initiative in 2017.
Called CFRT, an acronym for the Committee on Financial and Regulatory Technologies, the committee was tasked with examining how blockchain could be put to a more productive use. This was announced without revealing the actual applications that SEBI was considering.
Simply put, SEBI is upfront about not entertaining cryptocurrencies at the moment, but it would not mind putting blockchain technology to use if it was found healthy. The development comes at a time when crypto prices are soaring heavily, testing a new resistance floor in terms of USD. BTC, for example, is listed at $73,464.40. It has been credited to a rise in investor adoption and demand.
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SEBI, for now, has recognized the need for tokenization and instant settlements to compete with cryptos. If not provided, it could open the door for investors to transition and leave the traditional mechanism behind.
