According to reports, the current parliamentary session in India will see a new bill passed to order the ban on the use of all private cryptocurrencies.
The Securities and Exchange Board of India (SEBI) has been said to inform promoters to sell all their cryptocurrencies before engaging in any fundraisings through their Initial Public Offerings (IPO). This information has according to the report been handed to securities lawyers, merchant bankers as well as company executives involved in the IPO processes.Though no comment has been officially received from SEBI, it is being speculated that the decision of the regulators hints at a possible attempt of the government to ban cryptocurrencies not related to the one issued by the state.According to reports, the current parliamentary session will see a new bill passed to order the ban on the use of all private cryptocurrencies. Also, the new bill will contain a regulatory framework for the Reserves Bank of India to issue its digital currency just like what most countries are doing. A securities lawyer believes that the decision for SEBI to order all promoters to sell their cryptocurrencies is linked to the fact that investors may be at risk to be involved in an asset when the promoter holds another private asset deemed illegal in the country.The decision of SEBI was not taken lightly by some experts as it is believed that the order will not be justified. Vatsal Gaur, Partner, Pier Counsel in a report replied that just as the possession of any financial asset does not pose any risk to the listed entity, it is the same way the holding of any cryptocurrency by a promoter does not put the company at risk.Also, it is an option that the holding of a crypto asset is transferred overseas or handed to an affiliate. Gaur explains that the regulators may have no ill intentions about the decision. According to him, they are just being over-cautious, something that appears like a case of overreach.Mahesh singhi, managing director of Singhi Advisors, an investment banking firm also disclosed that most other investors are cautious when it comes to promoters holding a crypto asset as this could be banned in the country.It is reported that there is a temporary solution if companies want to file a Draft Red Herring Prospectus (DRHP), or promoters insist on holding onto their cryptocurrencies. There should be an affidavit that establishes that all cryptocurrencies will be sold 24 hours after the government bans them.According to the authorities of India, funds raised through IPO and another source will surely be in the hands of the promoters and investors, meaning there will be enough liquidity in their possessions that may increase the fear of being used for speculation. As part of the recent instructions, promoters will have to clear all their pending legal issues including any property disputes. This is because they will have to be mentioned in the DRHP.Monark Modi, the founder and CEO of Bitex Technologies PVT LTD., a cryptocurrency exchange also believes that there is a movement towards a digital world, and so there is no risk associated with cryptocurrency. He said that cryptocurrency is not a concept regulated by a single entity, but a globally decentralized concept.
