Skip to content

CS Professional · IFSCA - Regulations, Listing and Compliances · Overview of FinTech and Service Providers in IFSC

Orbit Tech, an IFSC fintech, uses a public blockchain to issue digital tokens that represent ownership of units of gold held in a vault, and it plans to offer them to investors. A director argues that because the tokens are on a blockchain, no securities or financial-product regulation can apply. Which view is correct?

The director is wrong. Legal and regulatory treatment depends on the substance of the instrument and the activity, such as the rights conferred and the services offered, not on the recording technology. A blockchain-based token can still fall within IFSCA's regulated financial products and services, and blockchain is not banned.

  1. ACorrect, since the technology used determines the legal character of an instrument
  2. BIncorrect; the legal treatment depends on the rights and nature of the instrument and the activity, not on the technology used to record itCorrect
  3. CCorrect, as IFSCA has no jurisdiction over any digital asset in the IFSC
  4. DIncorrect, but only because blockchain is banned in the IFSC

Explanation

Regulation follows the substance of the instrument and activity, such as the rights it gives and the service offered. Recording on a blockchain does not exempt it. IFSCA does regulate financial products and services in the IFSC, and blockchain itself is not banned.

Did you get it right without looking?

One question tells you little. A timed set on Overview of FinTech and Service Providers in IFSC shows your real accuracy, how long you take and where you lose marks.

Practise Overview of FinTech and Service Providers in IFSCFree diagnostic mock

More Overview of FinTech and Service Providers in IFSC questions