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The new rule will force cryptocurrency companies and exchanges , Crypto News


The new rule will force cryptocurrency companies and exchanges to store Know Your Customer (KYC) information and financial transactions of all their customers for five years. The move is considered a positive step towards compliance and user security on the crypto platform. However, experts also believe that this development will significantly increase the compliance cost of cryptocurrency exchanges.

The country's Computer Emergency Response Team (CERT-In), which oversees the Ministry of Electronics and Information Technology, has issued a new set of rules stipulating that VPN providers and crypto exchanges must provide detailed data about their users. should keep. The new guidelines are due to take effect at the end of June.

Unocoin cryptocurrency exchange CEO Satwik Viswanathan told that this is a positive step towards regulation. “We were storing the data of all our users from the beginning, so this move does not affect us,” he said, “.. the data will help prosecute tax evaders and any crimes that use crypto. "

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The new rule only applies to cryptocurrency exchanges that hold custody of crypto wallets on behalf of their users. A custodial crypto wallet is one where your assets are held in custody for you. This means that a third party will hold and manage your private keys on your behalf. In other words, you won't have complete control over your funds -- nor the ability to sign transactions.

Kashif Raza, a crypto and blockchain expert, said “no keys, no security”. “While users prefer custodian crypto exchanges because there are some advantages to using these types of exchanges, such as being able to deposit and withdraw fiat currency, they do not guarantee the safety of customers.”

However, Raza and others like him believe that it will not be easy for exchanges to comply with the new rules. Ensuring that maintaining users' data such as their name, address, contact information and transaction records will require massive infrastructure.

“Exchanges will be required to store data for five years and considering the volume of trades taking place on crypto exchanges, this will increase the cost as the new guideline states that all financial transaction data has to be stored. This means There is an additional burden for exchanges, explained Sarat Chandra, vice president of EarthID.

Another challenge will be in terms of storing the data locally in India, especially with foreign exchange. Earlier, payments giant Mastercard was struggling with the problem of storing user data locally.

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Chandra said, “This development also indicates that the government is in some way moving towards framing regulation. But we also need data storage guidelines first, and only then can we go for regulation like investor protection rights. We can move on to other aspects."

Meanwhile, some experts are not positive about this development, and believe that it will only spread fear among crypto traders. Hitesh Malviya, founder of IBC Capital, said, “The government can ban access to decentralized exchanges and global exchanges and without a VPN you cannot bypass them. It looks like the government is digging graves for the crypto community.”

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