There are no specific laws related to market makers associated with the Indian cryptocurrency exchange. There are specific guidelines promulgated by SEBI (Indian Stock Exchange), but these apply only to stocks and only to specific stock exchanges. These regulations are located at:
These SEBI guidelines for market makers do not apply to cryptocurrencies.
Following the SEBI guidelines, market makers have the following criteria:
- Market makers may be phased in on stock exchanges, and market making will only be introduced on stock exchanges in Bombay, Calcutta, Delhi and Madras in the first place.
- Market makers by SEBI are only permitted on the stock exchange.
- Each such market maker approved by SEBI must create a market for at least 5 scrips (stocks). Initially, market making was only introduced for scrips that were not included in the BSEnational Index. Each market maker should acquire at least 30,000 shares in each script. SEBI may change the minimum number of shares that need to be acquired based on the par value of the shares, the average delivery per settlement, the company’s floating shares, and so on.
a. These guidelines apply only to stocks.
You can also see the RBI (Reserve Bank of India) (Master Direction – Reserve Bank of India (Market Maker of OTC Derivatives) Direction, 2021).
https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12163
These instructions apply to OTC derivatives and therefore not to cryptocurrency exchanges.
Follow the master direction above
- The market maker shall only handle derivative products that are permitted from a governance perspective.
- Market makers may handle derivative products that have cash products and / or authorized derivatives as components.
- Market makers may not handle derivative products, including derivative products, as underlying assets unless specifically permitted in the direction of governance.
- Market makers must not deal with derivative products directly or in succession and cannot price independently.
In this direction, “market maker” means an entity that offers prices to users and other market makers. (Description: As such authorized under Section 10 (1) of the Forex Control Act of 1999 (42 of 1999), allowed to engage in Forex Derivative Transactions with Users and other Authorized Persons. A licensed person shall be treated as a market maker. The term “derivatives” has the same meaning as (iv) “derivatives” as assigned in Section 45U (a) of the Act. Suppose.
Section 45U (a) of the RBI Act defines “derivatives” as follows:
(A) “Derivatives” means products that are settled on a future date, the value of which is derived from changes in interest rates, exchange rates, credit ratings or credit indices, and securities prices (also known as the “base”). It will be derived. At times that include multiple combinations of them, including interest rate swaps, futures rate contracts, foreign currency swaps, foreign currency rupee swaps, foreign currency options, foreign currency rupee options, or other commodities that we may specify from time to time.
Now, coming to cryptocurrencies, these were broadly defined as follows under the Income Tax Act in 2022:
Section 2 Subsection (47A) “Virtual Digital Assets” means the following:
(A) Information, codes, numbers, or tokens (not Indian currency or foreign currency) generated by cryptographic means or other methods. Having a unique value or acting as a unit of value store or account, including use in financial transactions and investments. However, it is not limited to investment schemes. It can be transferred, stored, or traded electronically.
(B) Non-substitutable tokens or other tokens of similar nature.
(C) Other digital assets are designated as follows, as notified by the central government in the official bulletin.
Description.-For the purposes of this clause-
(A) “Non-fungible token” means a digital asset that can be designated by the central government by notifying in the official bulletin.
(B) The expressions “currency”, “foreign currency” and “Indian currency” shall have the same meaning as those assigned in Articles 2 (h), (m) and (q) of the Foreign Exchange Control Law, respectively. increase. , 1999 (42 in 1999). ]
https://www.indiabudget.gov.in/doc/memo.pdf When
https://www.indiabudget.gov.in/doc/Finance_Bill.pdf
Cryptocurrencies were first treated under Indian law by the revision of the Income Tax Act in 2022, and cryptocurrencies were defined to fall into the category of virtual digital assets. Currently, with the exception of Section 2 (47A) of the Income Tax Act, cryptocurrencies are not treated or defined under any other law. The SEBI Guidelines and RBI Master Direction for Market Makers do not deal with cryptocurrencies. There are no laws dealing with crypto market makers in India, and these are not yet regulated.
