India's Securities and Exchange Board of India (SEBI) is advocating for a collaborative, multi-agency strategy to regulate the cryptocurrency landscape, according to official documents obtained by Reuters. In a proposal submitted to an advisory panel of India's finance ministry, SEBI outlined a framework where various regulators would coordinate efforts to oversee the crypto sector within the country.

Under SEBI's proposal, the responsibility for monitoring cryptocurrencies categorized as securities, including initial coin offerings (ICOs), would fall under its purview. Additionally, SEBI would be tasked with issuing licenses for related financial products. Meanwhile, the Insurance Regulatory and Development Authority of India would oversee all cryptocurrency-related insurance cases, and the Pension Fund Regulatory and Development Authority would regulate pension-related matters involving cryptocurrencies.

Furthermore, the proposal suggests leveraging India's Consumer Protection Act to handle investor disputes related to cryptocurrencies. The Reserve Bank of India (RBI) has been proposed as the overseeing body for fiat-backed stablecoins, although the regulator has expressed reservations about cryptocurrencies, particularly advocating for a potential ban on stablecoins due to concerns over tax evasion.

The RBI has also highlighted the risks to financial stability posed by decentralized peer-to-peer transactions in cryptocurrencies, emphasizing the potential impact on revenue generated from money creation by central banks.

Dilip Chenoy, chairman of the Bharat Web3 Association (BWA), views this proposal as a crucial initial step towards establishing domestic legislation for the crypto sector. He emphasized the importance of industry input in shaping regulatory approaches, noting that the BWA is actively working on drafting a comprehensive document to contribute to the process.

Meanwhile, Indian regulators have been urging foreign cryptocurrency service providers to obtain licenses under the Financial Intelligence Unit (FIU). At present, only KuCoin and Binance have complied with these requirements. The FIU has also been involved in initiatives aimed at promoting compliance with Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) frameworks among market participants, as highlighted by FIU Director Vivek Aggarwal during a recent workshop for Virtual Asset Service Providers (VASPs).