BT EXCLUSIVE: Self regulation practices may become the base to regulate crypto exchanges

The current self-regulation in crypto platforms may become a base for the new regulatory framework if the government decides to regulate crypto as an asset class. This is because in the recent meeting convened by the Parliamentary Standing Committee on Finance with the representatives of crypto exchanges, the panel had a detailed discussion about the practices followed by exchanges while onboarding investors. The panel was chaired by BJP leader Jayant Sinha and it was the first ever meeting on the subject of cryptocurrencies by the government.

“The focus of the meeting was about knowing and understanding what practices are followed by exchanges while opening an account. The questions were around how stringent are our KYC verification and AML compliance policies for all users. Though the purpose was not stated, it might serve as a base for crypto regulations in the country if the government decides to regulate this new asset class,” said a chief executive officer of a leading crypto currency exchange on the condition of anonymity.

Prime Minister Narendra Modi also tweeted on Thursday stating, “It is important that all democratic nations work together on this and ensure it does not end up in the wrong hands, which can spoil our youth.”

Self-regulation by crypto exchanges

Crypto exchanges in India are currently following self-regulatory practices. At the time of onboarding they ask for Know Your Client (KYC) documents and bank account details from the customer. Along with KYC verification, AML compliance policies are also followed for users.

“With millions of Indian investors already holding some form of cryptocurrency and the innovation in the blockchain technology shaping the next-generation payments infrastructure, it is imperative that more such meetings will be needed to shape the regulatory framework as early as possible. The fact that the committee said that ‘crypto cannot be stopped, but must be regulated’ gives a huge boost of confidence to the crypto industry not here in India, but also across the world as well. With over 10 crore crypto users, India plays a significant role in the growth and development of this sector globally. The fact that the Indian government is open to talks on regulating crypto, should give the global markets a huge sigh of relief,” said Praveen Kumar, Founder and CEO, Belfrics.

Stakeholders have welcomed the long due meeting between the crypto industry stakeholders and the government bodies when a lot of ambiguity exists on several aspects of trading and holding of cryptocurrencies.

Sujata Seshadrinathan, Director, Basiz Fund Services said, “Efforts to curb challenges such as dissemination of misleading information as well as address issues of money laundering and other nefarious uses like narco-terror funding give clarity to GOI’s stand on digital currency.”

Also read: Ensure cryptocurrency doesn't end up in wrong hands: PM Modi at Sydney Dialogue