Revolutionary Settlement System Urgently Required to Stay Competitive with Crypto, Urges India’s Markets Authority

The head of India’s markets regulator says instant settlements are required to compete with crypto. Investors are likely to move to crypto if traditional markets “cannot offer tokenization and instantaneous settlement,” SEBI’s Madhabi Puri Buch said. This statement was made in reference to the need for regulated markets to keep up with the fast-paced and innovative nature of the cryptocurrency industry.

Settlement refers to the final step in payments and securities trade. It involves the transfer of assets from one party to another, usually at the end of a transaction. Traditionally, this process can take up to two days to complete, creating a delay in the settlement of funds. However, as the use of digital assets and cryptocurrencies continue to grow, the demand for faster settlement times has increased.

Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (SEBI), announced plans to introduce faster settlements on Monday. India is planning to introduce a same-day settlement cycle on an optional basis, starting from March 28. This move would make India the second country, after China, to implement same-day settlements. Other countries typically have a settlement cycle of two days.

“If our well-regulated market cannot compete with the crypto world and cannot offer tokenization and instantaneous settlement over the medium term, I won’t even say long term, you should expect investors to move,” Buch said. This statement highlights the importance of keeping up with advancements in the market to remain competitive and retain investors.

Buch also addressed the potential of a large portion of the market moving to crypto if regulated markets fail to offer instant settlement. This factor, combined with foreign portfolio investors’ challenges in complying with faster settlement cycles, could create a significant shift towards crypto in the Indian market.

The broader plan also includes a plan to adopt instant settlements, starting from March 2025. The final approval for this plan is yet to be given by the market regulator’s board, which is set to meet on Friday.

“Everybody wants instant everything. So, why should anyone believe that tomorrow if an alternative is available with instant settlement and tokenization, they would choose the regulated market that doesn’t offer it? You should expect people to move to the alternative,” Buch added. This statement further emphasizes the need for regulated markets to embrace faster settlement times and technology.

The growing popularity and value of cryptocurrencies are also evident in Bitcoin‘s recent price surge, crossing the $73,000 mark on Wednesday. SEBI’s distant role in regulating crypto in India has been noted in the past, as it was predicted to become the regulatory authority for the industry. However, the finance ministry has taken the lead in shaping global consensus for crypto regulation.

The Reserve Bank of India, the nation’s central bank, has been a strong opponent of crypto, instead promoting their own central bank digital currencies. As the market continues to evolve, it is essential for regulators to keep up with new developments and provide a competitive environment for traditional markets to thrive.

In conclusion, SEBI’s chairperson, Madhabi Puri Buch, highlights the importance of adopting faster settlement times in regulated markets to remain competitive with the ever-changing cryptocurrency industry. As the demand for instant settlements continues to rise, it is crucial for regulators to stay up-to-date and provide investors with the best possible experience.