Cryptocurrency: Willing to accept stricter regulations; ambiguity impacting growth: Crypto exchanges

Cryptocurrency companies have made many proposals to regulate cryptocurrency, from making exchanges accountable for any money laundering or other regulatory concerns to distinguishing between different exchanges based on their net worth and technology.

In a series of recent meetings between some crypto exchanges and their advisors and government officials, the exchanges also said they were ready to comply with all government guidelines related to Asset and Liability Management (ALM), know your customer (KYC), and anti-terrorist finance industry insiders said. Abuse of stock exchanges.

One of the lawyers who provided one of these representations said that in most cases, the industry wants the government to regulate cryptocurrency exchanges rather than regulating crypto assets per se.

“Regulators can hold exchanges accountable and require them to follow KYC and AML practices similar to what we have at NBFCs and banks,” said Jaideep Reddy, technology law leader at law firm Nishith Desai Associates.

The exchanges said they already have a basic code of conduct and are open to the Reserve Bank of India (RBI) or market regulator SEBI, which regulates them.

Exchanges are concerned that regulatory uncertainty will hamper their growth in the coming months as many serious investors may shy away from the asset class.

“Many exchanges have even requested the eligibility of exchanges and broker platforms to register with the government,” said the CEO of the cryptocurrency exchange, who requested anonymity. “The exchanges claim that the government can come up with a framework in the next budget that will essentially make the exchanges responsible for any money laundering, “know your customer” or other regulatory issues.”

Several officials from the Ministry of Finance, the RBI, tax departments, and investigative agencies including the Financial Intelligence Unit have raised concerns about how cryptocurrencies, in their current form, pose a “systemic risk” not only to security but even to the Indian economy, as ET reported Earlier.

Officials have also raised concerns about how cryptocurrencies are used, and if there is a law allowing them to be used in “untraceable illicit transactions,” it could “significantly reduce regulatory effectiveness.”

Last week, the General Directorate of GST Intelligence, the investigative arm of the indirect tax administration, conducted searches on several cryptocurrency exchanges and asked them to pay GST on fees or margins for their transactions.