Sebi, RBI, Taxman Get Access to KYC Data Under Crypt Bill

The new cryptocurrency bill is set to empower regulators and government agencies, including the securities and Exchanges Board of India (Sebi), Reserve Bank of India (RBI) and the tax department to scrutinize know your customer (KYC) data of investors that crypto exchanges have collected from clients.

According to two people aware of the development, the new regulations would mandate cryptocurrency exchanges to share their KYC data, which mainly includes details of their investors, which the government The KYC data could help regulators zero in on transactions across platforms, check that against bank deposit and even calculate or scrutinize gains and other discrepancies. The new cryptocurrency framework will also put in place a uniform KYC process that every exchanges must adhere to, they said. As things stand today, different cryptocurrency exchanges have different KYC processes.

“KYC data will become the key for any scrutiny by any regulator,” one of the person aware of the development said.

“And unless this is spelled out in the law and mandatory, the cryptocurrency operators (exchanges) need not share it.”

Many in the government fear that several cryptocurrency investors could be operating multiple accounts not just across platform but even with multiple banks and NBFCs where their money is eventually deposited. Insiders say because most banks have stayed away from providing services to exchanges, cryptocurrency transactions are structured in a different manner. And the regulators may find it hard to scrutinize this data.

Mumbai: India could see Robin hood-like applications emerge in the next few years if cryptocurrency is classified as an asset class. Nasdaq listed Robin hood is a mobile application that allows users to do commission-free trading in stocks, exchanges-traded funds and cryptocurrencies. While there are similar ‘discount brokers’ in India, none of them currently allow trading in crypts. Online Stock trading platforms ET spoke to said they could consider adding crypts to them of firings, provided the virtual asset gets legal backing in India.

Nitin Kamath, founder of Zeroth, told ET that while it is too early to comment on the future directions zeroth will take is case crypto is regulated, the company could get into it if the Sebi “put explicit regulations”

Previn Jada, founder of raise, said the firms is awaiting regulatory clarity. Nischal Shetty, cofounder of Wazir X, said more competition could expand the crypto ecosystem rapidly.

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