RBI to Strengthen KYC Guidelines for the Crypto Industry
IndiaTech has suggested enhancing the KYC guidelines and obligating the cryptocurrency industry to share customer details to map crypto transactions in India
Indian crypto industry representative, IndiaTech has recommended improving the Know Your Customer (KYC) guidelines for the Virtual Assets (VA) and Virtual Asset Service Providers (VASPs). Moreover, cryptocurrency exchanges have to share customers’ information with the other VASPs to map all the people indulged in crypto transactions in the country.
This proposal was stated in the crypto community’s first meeting with the Reserve Bank of India (RBI). IndianTech also proposed to develop a central filtration approach through which only legit coins to be listed. At present, crypto exchanges are using an internal framework to identify which coins to list.
The recommendations hold significance as strengthening the regulations could prevent ban on cryptocurrency trading and overcome increasing concerns of money laundering activities. The country’s government is all set to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, most likely in the coming parliamentary session.
“Given the current situation, crypto exchanges are willing to work on a common data-sharing practice if that assuages the government and regulators,” a person aware of the discussions said.
IndiaTech’s suggestions have been constituted by assessing the FATF recommendations and global KYC compliance requirements to be implemented in India.
“We have been constantly giving inputs to the government after the release of the White Paper over multiple things in the last few weeks. There are a lot of dependencies that came out of the process, and we have shared our recommendations with the regulator as well as the government,” said Ramesh Kailasam, President and CEO of IndiaTech.
At present, only a few cryptocurrency exchanges promise to enhance the KYC verification approach. However, the practices are not uniform across exchanges. Since the crypto exchanges are not properly regulated by the government, there is no way of achieving uniformity.
According to the document review by ET, Indian crypto exchanges lack the mechanism of monitoring non-residents’ crypto accounts. Therefore, Members of parliament onboarded crypto industry’s representatives to narrow down the future of digital currencies in the country.
“They (IndiaTech) have also recommended mandating submission of KYC documents for all transactions without any minimum threshold,” one of the sources said.
According to the Lok Sabha bulletin published on Tuesday, the Bill “seeks to prohibit all private cryptocurrencies in India” but allows for “certain exceptions to promote the underlying technology and its uses.”
The bill sounded similar to the earlier talks of an outright ban on digital currencies when it first emerged. However, the people associated with the crypto sector said that discussions have come a long way since the current recommendations can be positively interpreted.