India’s new crypto law is set to red-flag many investment schemes introduced by crypto exchanges and individuals that are akin to multi-level marketing (MLM), chit funds and systematic investment plans (SIP), as it looks forward to creating a robust regulatory system to safeguard vulnerable rural populations purchasing risky cryptocurrency assets.

Regulators including the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have raised issues in front of a parliamentary panel about how some individual investors with business models that are similar to those of chit funds – are gathering money in small towns for investing in cryptocurrency assets.

The RBI has highlighted how some Indians have even begun accepting crypto payments for export services, thus presenting a wide systemic risk.

Apparently, regulators have labeled cases in the hinterland, especially in Bihar and Uttar Pradesh, where chit funds or collective investment schemes have been introduced to store money for the purported investments in cryptos. Cryptocurrency exchanges and associated organizations have also made representations to the panel of central lawmakers. Officials at RBI and SEBI couldn’t immediately be reached for comments.

Insiders warn that apart from chit funds, even MLM-like schemes are being encouraged by some unregulated entities.