To bolster India’s financial markets and prevent investors from migrating to cryptocurrency platforms, Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (SEBI), has issued a stark warning.
Buch emphasized the need for regulated markets to offer instantaneous settlement processes, citing the growing allure of cryptocurrencies, which provide swift transactions and tokenization. This move comes amidst escalating concerns about potential market exodus and follows Bitcoin’s recent surge to an all-time high, crossing the $73,000 mark.
SEBI’s push for faster settlements
SEBI has unveiled plans to introduce a same-day settlement cycle, effective from March 28, 2024, on an optional basis. This initiative positions India as the second country, after China, to implement such a rapid settlement system, a departure from most nations’ conventional two-day settlement period. Moreover, SEBI aims to adopt instant settlement mechanisms by March 2025, subject to approval by the market regulator’s board, which is scheduled to convene on Friday.
Buch underscored the urgency for India’s regulated markets to keep pace with the evolving financial landscape, particularly in light of the burgeoning popularity of cryptocurrencies. She cautioned that failing to offer tokenization and instantaneous settlement capabilities could prompt a significant portion of the market to migrate to crypto platforms.
Foreign portfolio investors have reportedly voiced concerns about the operational hurdles associated with adhering to faster settlement cycles, signaling the pressing need for regulatory action.
SEBI’s stance on cryptocurrency regulation
SEBI’s historical stance on cryptocurrency regulation has been characterized by a cautious approach, with the authority initially speculated to oversee crypto-related matters. However, SEBI has seemingly adopted a more reserved role in this domain, with the nation’s finance ministry taking the lead in shaping global consensus on crypto regulation.
The Reserve Bank of India (RBI), India’s central bank, has been vocal in its criticism of cryptocurrencies while advocating for the development of central bank digital currencies (CBDCs).
As India gears up to implement same-day settlement cycles and explore instant settlement mechanisms, SEBI’s proactive measures underscore the imperative of adapting to the evolving financial landscape. With cryptocurrency gaining traction as a viable alternative, regulators are tasked with striking a delicate balance between innovation and market stability.
SEBI’s initiatives aim to fortify India’s regulated markets against the allure of crypto, ensuring investor confidence and bolstering the nation’s financial ecosystem. However, the road ahead necessitates careful navigation of regulatory frameworks to harness the potential benefits of emerging technologies while mitigating associated risks.
