In response to the minister of finance naming cryptocurrency as illegal tender Indian exchanges have banded together to create a central repository to maintain a real-time database of traders in a bid at self-regulation.
Exchanges propose self-regulation
When Finance Minister Arun Jaintly named cryptocurrency illegal tender in his early February budget speech he set off a rash of panic selling across Indian exchanges. Since then the panic has subsided and exchanges have made moves to self-regulate in order to put off any harsher government intervention.
Cryptocurrency traders are required by exchanges to submit both their PAN and Aadhaar number along with banking details in order to open a trading account. Though the proceeds from all transactions are credited to the same account the data is not shared as each exchange operates exclusively.
Seven cryptocurrency exchanges have come together to form the Blockchain and Cryptocurrency Committee (BACC) of the Internet and Mobile Association of India. This mouthful has tasked itself with collecting and pooling users trading data through PAN cards and making this information available to government agencies.
“This is one of the proposals we are planning to submit to the government committee which is looking into the issue of cryptocurrency,”
said Ajeet Khurana who heads the BACC.
Indian tax authorities have notified an estimated 100,000 investors asking them to reveal profits earned on cryptocurrency trading for 2017.
BACC will promote best practices
Industry experts estimate that in 2017 about 10,000 crore (100 billion rupees) trade in cryptocurrency was done by around five million active Indian traders.
The BACC plans to submit it’s proposal to the government committee headed by economic Affairs secretary SC Garg this week. The government panel will submit it’s recommendations by March and all expect a trading monitor of cryptocurrency to be appointed by March. The BACC is planning a code of conduct that would require all exchanges following Know Your Customer (KYC) and anti-money laundering policies already enacted and followed by individual exchanges.
“These exchanges don’t deal with cash and will adopt the best practices applicable for the banking industry Though the government has specified that cryptocurrencies are not legal tender, we hope to present to the government committee that people can still trade in them like they do in ‘stock or gold’,” said Khurana.Globally Japan was the first country to establish regulatory oversight of cryptocurrency exchanges in May of 2017 while other major trading countries like the US and South Korea are still exploring their own paths to regulation.