In what seems to be another anti-crypto move by regulators in India, IPO promoters may soon be forced to sell their crypto holdings before being allowed to participate in raising funds.

According to a report by the Economic Times, the Securities Board of India may disqualify IPO promoters from raising funds if they hold cryptocurrencies.

This move is reportedly an extension of SEBI’s instructions to securities lawyers, merchant banks, and other stakeholders in the IPO ecosystem regarding cryptos.

According to a securities lawyer quoted by ET, “There could be a direction from the government in this regard. The market regulator seems to think that this could become a risk for investors if a promoter holds an asset that is illegal in the country.”

As previously reported by Cointelegraph, speculation is rife in India that a blanket crypto ban is imminent. According to people with inside knowledge of ongoing deliberations in the country’s parliament, cryptocurrency holders will be given three to six months to liquidate their virtual currency holdings once the ban comes into effect.

Earlier in February, reports also emerged that India’s parliament was looking to fast-track the crypto bill.

Even if the ban does not come into effect, some investment bankers say SEBI may still prohibit IPO promoters from owning cryptos. Speaking to ET, Mahesh Singhi of investment banking firm Singhi Advisors said that SEBI is afraid of a situation where IPO promoters divert funds raised from public sales to speculative investments.

For now, some IPO promoters have already come up with a temporary solution in the form of an affidavit stating that they will liquidate all cryptocurrency holdings in 24 hours if the rumored ban comes into effect.

India’s crypto market has suffered the brunt of unfavorable regulations by government agencies for years. Back in March 2020, the Supreme Court overturned a central bank ban on banks servicing cryptocurrency exchanges in the country.

Amid fresh reports of a total crypto ban, former Coinbase chief technology officer Balaji Srinivasan has said that such a move would be akin to banning the internet.