India’s securities regulator has said firms will be expected to sell off any holdings in digital currency before going public with an IPO, according to reports emerging in local media.
The Securities and Exchange Board of India is thought to have informed securities lawyers, bankers and private entities of the new requirements, which will serve as additional restrictions on the IPO process, the Economic Times reported.
The position has yet to be stated in writing by the regulator, but sources close to the matter have confirmed the new rules will take effect for companies looking to initial public offering (IPO) in India in future.
The restrictions are thought to have arisen due to moves towards a ban on digital currencies in India, according to the report.
“There could be a direction from the government in this regard,” a securities lawyer currently working on some IPOs told the news outlet. SEBI seems to think that “this could become a risk for investors if a promoter holds an asset that is illegal in the country.”
Vatsal Gaur, partner at the law firm Pier Counsel, was quoted by the news outlet saying SEBI was being “over cautious here and it appears like a case of overreach.”
“If a promoter holds any cryptocurrency, it may not necessarily expose the company to any risk — the same way as holding any other financial assets doesn’t pose a risk to the operations of a listed entity.”
The developments come ahead of a possible ban on cryptocurrencies throughout India, with a new bill set to be introduced that would effectively prohibit dealing in private digital currencies.
The legislation is also expected to lay down legal infrastructure for the digital rupee, a central bank digital currency that will be rolled out by the Reserve Bank of India in complement to fiat cash.
See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.