Indian financial watchdog warns mutual funds to avoid Crypto

Governments and regulators in India have supported blockchain technology, but not crypto assets.

Indian financial watchdog warns mutual funds to avoid Crypto

There was no significant breakthrough in India's crypto saga this year. According to the country's market regulator, mutual fund houses should not offer funds relating to crypto-assets since the regulatory climate is unclear.

Chairman of the Securities and Exchange Board of India (SEBI) Ajay Tyagi reportedly stated that the regulatory body does not want domestic mutual funds to develop crypto-based new fund offerings (NFOs) until a digital asset bill is released.

As a result of regulatory uncertainty, Invesco Mutual Fund postponed the launch of its blockchain fund after the SEBI chief spoke about mutual fund investments involving cryptocurrency.

Securities regulators in the country approved Invesco Mutual Fund's plan to launch a blockchain fund earlier. The fund was scheduled to launch on November 24th.

As the first fund of its kind in India, the fund would have enabled companies across the globe to participate in the blockchain space.

Governments and regulators in India have supported blockchain technology, but not crypto assets.

Over the past few years, not much has changed. Two times this year, the Indian government tried to introduce a crypto bill that would have prohibited “all private cryptocurrencies” before rescinding it. Crypto regulation was a popular topic during parliament's winter session.

Digital currencies may undermine the stability of the Indian economy and financial system, according to some policymakers. The Indian central bank has taken an aggressive stance against cryptocurrencies.

On the other hand, Prime Minister Narendra Modi has largely avoided making hostile remarks about the Crypto industry, and instead has emphasized the necessity of regulation.

Ahead of the Summit for Democracy, Modi delivered a virtual address:

We must also jointly shape global norms so that new technologies like social media and cryptocurrencies can be used to empower democracy, rather than undermine it.

The Indian crypto market continued to grow despite the uncertainty. Market growth between July 2020 and June 2021 was 641%, according to Chainalysis' report from October.