The Chairman of the Securities and Exchange Board of India (SEBI), Ajay Tyagi, urged mutual funds to avoid investing in crypto-related assets as the government considers new cryptocurrency rules. Speaking at a press conference on Tuesday, Tyagi advised firms to refrain from investing in funds linked to crypto assets until there is clarity on the policy and regulatory framework.

“Those who have invested in mutual funds, — in companies related to crypto-assets or foreign firms through fund-of-funds (FOF) — my thinking is that till we get clarity on its (crypto's) policy, businesses should not make such investments,” said the SEBI chairman.

While the regulatory environment for cryptocurrency in India is currently murky, the country has already witnessed an exponential rise in its popularity. It's also unclear if crypto investments come with any tax obligations in the country.

Tyagi's remarks come following the recent event involving an asset management firm (AMC), Invesco Mutual Fund. Despite Sebi's approval, it delayed its blockchain fund last month owing to legislative uncertainty.

There have been talks about cryptocurrency being discussed in Parliament during the winter session recently. The talks gained further momentum following a parliamentary standing committee on finance's meeting with cryptocurrency stakeholders to identify possible opportunities and challenges that may occur when it comes to crypto financing and investment.

Related: Institutional managers hold a record $72.3B of crypto — CoinShares

The Indian government had formally planned to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for debate in the parliament during its current winter session. The bill, however, does not appear among the bills that India's lower house will consider as it concludes the winter session.

Meanwhile, Indian Prime Minister Modi has been increasingly vocal regarding cryptocurrencies in 2021. During the recent Sydney Dialogue, Modi urged democratic nations to collaborate in order to make the most of cryptocurrencies and blockchain technology. He also warned against their malicious use.