Parliamentary Panel Recommends SRO to Oversee Crypto, Protect Investors Until Laws Enacted
GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains·
Why in news
The Parliamentary Standing Committee on Finance recommended a Self-Regulatory Organisation (SRO) model to oversee the crypto industry and protect investors pending formal legislation.
Background
The committee proposed that the SRO be supervised by either the RBI or SEBI. The recommendation covers cryptocurrencies, Non-Fungible Tokens (NFTs), and Decentralized Finance (DeFi) tokens while emphasizing technology neutrality.
Facts for Prelims
- BodySRO: A non-governmental body that regulates its own members' conduct within a specific industry.
- BodyRBI: The central bank of India responsible for monetary policy and banking regulation.
- BodySEBI: The statutory body regulating securities and capital markets in India.
- FactCryptocurrencies in India are currently subject to taxation despite the absence of a dedicated legal framework.
For Mains
Q. Discuss the challenges of regulating decentralized digital assets like cryptocurrencies and DeFi tokens in India while balancing investor protection and technological innovation.
Dimensions to cover in your answer
- Regulatory arbitrage: Risk of illicit activities exploiting the current lack of a dedicated statutory framework for NFTs and DeFi.
- Technology neutrality: Ensuring regulations remain robust against evolving blockchain protocols without stifling the underlying innovation.
Keywords: Regulatory Arbitrage · Investor Protection · Technology Neutrality · Decentralized Finance · Statutory Framework
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