This appears to be another step by Indian regulators in the fight against cryptocurrency: IPO organizers may soon have to sell their cryptocurrency before they can participate in fundraising.
According to a report by the Economic Times, the Securities Board of India may deny IPO regulators the right to raise funds if they have digital currencies.
This action is an extension of SEBI’s guidance for securities attorneys, commercial banks, and other stakeholders in the ecosystem of cryptocurrencies IPO.
According to a securities attorney quoted by ET, “There may be government guidance in this regard. It appears that the market regulator believes it could pose a risk to investors if the regulator has an illegal asset in the country.”
As Cointelegraph previously reported, there are rumors in India that a complete ban on digital currencies is imminent. Cryptocurrency holders will have three to six months to liquidate their holdings from virtual currencies when the ban goes into effect, according to people familiar with the ongoing discussions in the country’s parliament.
Earlier in February, reports surfaced that the Indian parliament wanted to track the cryptocurrency bill.
While the ban has not taken effect, some investment bankers say SEBI may still be preventing IPO regulators from owning cryptocurrencies. Speaking to ET, Mahesh Singhi of Singhi Advisors investment banking said SEBI is concerned about a situation in which IPO organizers divert money raised from public sales into speculative investments.
So far, some IPO promoters have already suggested a temporary solution in the form of a statement that they will liquidate all cryptocurrency assets within 24 hours if rumors of the ban go into effect.
The Indian cryptocurrency market has been subject to adverse government regulation for many years. Back in March 2020, the Supreme Court annulled the ban the central bank had placed on banks providing cryptocurrency exchange services in the country.
Amid recent reports of a sweeping cryptocurrency ban, Balaji Srinivasan, Coinbase’s former chief technology officer, said the move would be an internet blocking.