Indian regulator may ban IPO promoters from holding cryptocurrencies

The Securities and Exchange Board of India may force IPO promoters to ditch crypto, according to reports. IPO promoters may soon be forced to sell their crypto holdings before being allowed to participate in raising funds.

India’s regulators appear to have another anti-crypto move in their sights, with IPO promoters likely to soon be forced to sell their crypto holdings before being allowed to participate in raising funds.

The Securities Board of India may disqualify IPO promoters from raising funds if they hold cryptocurrencies, The Economic Times reported .

The move is reportedly an extension of SEBI’s instructions to securities lawyers, commercial banks, and other stakeholders in the IPO ecosystem regarding cryptocurrencies.

“There may be a direction from the government in this regard. The market regulator seems to feel that if promoters hold assets that are illegal in the country, it could become a risk for investors,” a securities lawyer was quoted as saying by the Economic Times.

As Cointelegraph previously reported, India is rumored to be introducing a complete ban on cryptocurrencies. According to insiders of the ongoing deliberations in the country’s parliament, once the ban takes effect, cryptocurrency holders will have three to six months to liquidate their digital currencies .

Earlier in February, there were also reports that the Indian Parliament was planning to fast-track a crypto bill.

Even if the ban does not come into effect, some investment bankers say SEBI may still prohibit IPO promoters from owning cryptocurrencies. Mahesh Singhi of investment banking firm Singhi Advisors told The Economic Times that SEBI is afraid of a situation where IPO promoters divert funds raised from public sales to speculative investments.

Currently, some IPO promoters have proposed a temporary solution in the form of affidavits stating that they will liquidate all cryptocurrencies within 24 hours if the rumored ban comes into effect.

India’s crypto market has been buffeted by unfavorable regulations from government agencies for years. Back in March 2020, India’s Supreme Court overturned the central bank’s ban on banks servicing cryptocurrency exchanges in the country.

Amid new reports of a blanket ban on cryptocurrencies, former Coinbase CTO Balaji Srinivasan said such a move would be tantamount to banning the internet. (Cointelegraph)