The Bombay Stock Exchange (BSE) has rejected a company’s application for listing its shares. According to reports, the firm raised funds through a preferential stock offering to invest a bulk of the funds in cryptocurrencies, which is why the stock exchange barred its listing.In its statement, the Bombay Stock Exchange (BSE) mentioned that “the policy on investment in virtual digital assets (VDAs) is under review and till a final view emerges, we would not be able to process the applications of this nature”. The company in question, Jetking Infotrain, engages in IT training. The firm had initially gotten an in-principle approval from the BSE on May 9, after the board passed a resolution on May 23 for allotment of more than 3.96 lakh shares, taking the total amount to Rs. 6 lakh (approximately $720,000).Bombay Stock Exchange rejects crypto-linked firm’s listing applicationIn the documents filed with the BSE, based on which it received its initial clearance, its objectives were stated as providing education and skill development, general corporate purposes, and acquisition of VDAs. Most of the proceeds from the issue, which is around Rs. 3.96 crore, representing about 60% were to be invested in buying VDAs.Jetking has crypto investments in its treasury book, a disclosure it made to the Registrar of Companies under the Ministry of Corporate Affairs. Indian firms are allowed to invest in VDAs, just as they use surplus funds in mutual funds, securities, and fixed deposits, but are required to disclose them. The BSE directives indicate that even though companies are allowed to take direct crypto exposure out of cash profits and internal accruals, authorities are still against listed companies raising funds to invest in digital assets.“We had processed the application in the normal course as per extant norms. Final approval was kept on hold to take up the issue of fundraising for investment in VDA at the policy level with the Regulator. Subsequently, as per the revised norms, a decision was taken to reject the application,” a Bombay Stock Exchange spokesperson said.Meanwhile, Siddharth Bharwani, joint MD and CFO of Jetking, mentioned that the company is currently looking into the whole situation and examining the possibility of approaching the Securities Appellate Tribunal. “It has been five years since the Supreme Court said that cryptos were not illegal but require regulations,” Bharwani added. Once shares are already allocated and proceeds have been deployed, refunding investors and extinguishing stock can be a very complicated process.Crypto regulation remains a grey area in IndiaThe current stance of the Bombay Stock Exchange regarding VDA treasuring entities would force most companies in the country to halt their plans to launch the same product. Until this verdict, there has been optimism that most companies plan to follow in the footsteps of large Bitcoin treasury companies like Strategy in the United States and Metaplanet in Japan. Presently, the primary purpose of these companies is to hold Bitcoin and other digital assets in their balance sheet.However, all these appear to be a far cry in India, as digital assets are not seen as securities nor neither are they seen as currency, but are considered as intangible assets. Under the circumstances, dealing in digital assets cannot be considered financial services as offered by non-banking financial companies. Also, if the shareholders in a digital asset treasury company are domestic, such entities may not have to deal with issues relating to foreign direct or portfolio investments and the Foreign Exchange Management Act.“There’s an increasingly urgent need for clearer classification of virtual digital assets under various existing laws. An approach of express regulatory guidance would be preferred to policy uncertainty,” said Jaideep Reddy, partner at Trilegal. Like the stance of the Bombay Stock Exchange, banks are also caught in a similar ambiguity. While some businessmen have been able to invest in US crypto ETFs through the RBI’s liberalized remittance scheme, local banks are still divided on categorizing the investments when handling the funds transfer. Get $50 free to trade crypto when you sign up to Bybit now