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India’s Securities Regulator Wants IPO Promoters to Sell Crypto Holdings: Report

  • Posted On - 2021-02-22 13:25:25

Top securities regulator of India reportedly wants IPO promoters to keep themselves off from holdings of any cryptocurrency before their companies consider filing for public listings.

According to the report from the Economic Times, the Securities and Exchange Board of India (SEBI) has been informally in talk with merchant bankers, lawyers and company executives over several weeks.

Yet no written report has been formally released by SEBI, however, several sources close to the matter told the Economic Times the communications could be related to India’s planned restrictions on non-state-issued cryptocurrencies.

India is said to be planning to ban the use of “private cryptocurrencies” with a new bill set to be introduced in the ongoing parliamentary session. The bill is also expected to introduce a framework for the Reserve Bank of India to issue its own digital rupee.

“The market regulator seems to think that this could become a risk for investors if a promoter holds an asset that is illegal in the country,” said a securities lawyer in the report.

Mahesh Singhi, MD of investment banking firm, Singhi Advisors, said the fear is that the funds raised could be utilized for the speculation.

“The regulator had been giving indirect messages on this and in certain cases even other investors are cautious when it comes to promoters holding crypto assets as these could be banned in India,” said Mahesh. “Having cryptocurrency holdings is a ‘red flag’ for promoters that would need to be mentioned in an IPO prospectus.”  further he added.