A silver Bitcoin cryptocurrency with India flag in the background
Courtesy: Ewan Kennedy

SEBI Chief asks Mutual funds to avoid crypto-based investments till there’s a law

Ajay Tyagi, Chairman of market regulator the Securities and Exchange Board of India (SEBI), said that mutual funds cannot invest in cryptocurrency-related products until the government brings its cryptocurrency bill and clear regulations on the space are implemented.

A silver Bitcoin cryptocurrency with India flag in the background
Courtesy: Ewan Kennedy

Tyagi made the remarks during a press conference after the SEBI board meeting. The capital market regulator approved various revisions to mutual fund and initial public offering (IPO) guidelines during its board meeting, including the extending of the lock-in period for 50 percent of anchor investments in IPOs.

The SEBI chairman’s comments on crypto-related MF investments come after Invesco Mutual Fund pushed back the launch of its blockchain fund in India due to regulatory concerns surrounding cryptocurrency law in India. On November 24, the fund house originally planned to launch Invesco India – Invesco CoinShares Global Blockchain ETF Fund of Fund but was put on hold even after receiving approval from SEBI.

The Navi Mutual Fund, led by Sachin Bansal, filed draught papers to SEBI earlier this month in order to launch its blockchain index fund of funds (FoF). Navi Blockchain Index An open-ended fund of funds (FoF) is an open-ended fund of funds that invests in units of foreign exchange-traded funds (ETFs) or index funds based on the IndxxBlockchain Index.

The government is currently in the process of bringing a cryptocurrency bill to Parliament. While the bill was slated to be introduced in the winter session, experts now believe it will be tabled in the next Budget session. The bill is generally in favor to restrict the use of cryptocurrencies as a medium of exchange, while it is probably to allow Indians to retain cryptocurrencies such as Bitcoin and Ethereum as digital assets.

Moreover, media reports have suggested that the government may assign responsibility for regulating the crypto industry to the capital market regulator. According to experts, cryptocurrency regulation will allow institutional investors in India to engage in the crypto market, which they have dodged partly due to concerns and the asset class’s volatile nature.

Finance Minister Smt. Nirmala Sitharaman stated earlier this month that a ‘well-consulted’ bill is on its way and that it will be presented in parliament after the cabinet approves it. The Reserve Bank of India, the central bank members, also expressed concerns over private cryptocurrencies at a recent board meeting. The bill also aims to provide a framework for the introduction of official digital currency regulated by the RBI.