The Securities and Exchange Board of India (SEBI) has informally told companies, bankers and securities lawyers currently preparing for their initial public offerings (IPOs) to ensure that promoters of entities sell any cryptocurrency holdings they may have prior to listing their companies on stock exchanges, the Economic Times reported. Over three weeks ago, the government announced that it would introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will ban “private” crypto-currencies while at the same time providing the RBI with the requisite legal powers to develop a central bank-backed digital currency (CBDC), according to an official Lok Sabha Bulletin Part II for the Budget Session 2021 of Parliament. While the government wants to promote the use of blockchain across various use cases, it has decided to enter the global race of creating a Central Bank Digital Currency (CBDC) while at the same time banning “private” crypto-currencies. This is similar to the model pursued in China. According to the report, since 'private' crypto-currency holdings would be deemed illegal under the proposed Bill, promoters with cryptocurrency holdings would be seen as a risk. Particularly, if the promoters use the funds they raise from an IPO to buy more cryptocurrencies. The report says that some promoters may want to hold on their cryptocurrency holdings, even though they are in the process of filing their Draft Red Herring Prospectuses. Therefore, one solution that lawyers have come up with is a sworn affidavit signed by promoters that they will liquidate all…
