Crypto Exchange Regulation: SEBI-Led Framework Under Discussion
Why in the news
With Budget 2026-27 near, the Finance Ministry consulted SEBI and RBI about bringing crypto exchanges under one proper regulatory structure.
Key facts
| Regulator | Proposed role |
|---|---|
| SEBI | Mandatory registration; platforms, disclosures, conduct, investor protection |
| RBI | FDI in crypto entities, cross-border dealings, capital flow risks |
- Fills the long-standing lack of one market regulator for crypto.
Why needed
- Oversight is scattered, seen as a major enforcement weakness.
- Tax authorities handle Virtual Digital Assets (VDAs) taxation; FIU-IND handles anti-money laundering; enforcement agencies chase illicit flows.
About crypto exchanges
Digital marketplaces to buy, sell, trade or hold crypto such as Bitcoin and Ether.
| Type | Traits |
|---|---|
| Centralised (CEX) | Company-run; KYC/AML; higher liquidity; custodial risk |
| Decentralised (DEX) | Peer-to-peer through smart contracts; non-custodial; counterparty risk lower, technology risk higher |
| Hybrid | Custodial control plus on-chain settlement |
Objectives
- Investor protection and market integrity.
- Tax compliance and traceability.
- Curbing illicit flows, money laundering and terror financing.
- A regulated ecosystem rather than a ban.
Exam angle
- Proposed primary regulator: SEBI.
- RBI concerns: FDI and cross-border flows.