Indian Government is not only laying down the foundations of proper crypto regulation, but also amending existing laws in the context of crypto.
In its latest move, Government has made it compulsory for Indian crypto exchanges to submit data of their customers with the concerned authorities. The law has been told to become applicable upon both types of crypto exchanges i.e. whether private or unlisted firms. From now on each firm will be required under the law to provide its crypto dealings, earnings, profits and losses.
A Governmental Official told that the action has been taken because it will automatically boost crypto adoption within institutional sector. He informed that the Government is anticipating that this move will ensure growth of crypto industry in India on a rapid pace.
It is known by all that crypto exchanges globally earn profits as well as utilize its funds by investing them in further crypto trading. In addition, at all times, these crypto exchanges are in possession of several cryptocurrencies. Once the value of their withheld crypto assets’ soar, they are the ultimate beneficiary of the earnings.
While in many exchanges, if a customer of the exchange is investing then the firms are also found providing leverages. For example, many firms asks customers to invest 20% while the rest 80% is injected by firms themselves. It seems that the law implemented in India was fully aware of this aspect and therefore implemented it crypto exchanges.
However, a large number of Indian crypto exchanges were found to be uncertain whether the law was applicable on them or not. Many were seen asking this question on social media websites. They were asking whether they were to give details of their dealings only or they were to provide data of customers as well.
Nischal Shetty, who is the CEO of leading Indian crypto exchange namely WazirX was too unsure about the application of the law. He said that he is completely unaware of the real intention of the law. However, he stated that in either case, the move is beneficial for both i.e. Indian crypto industry as well as the country. He added that he believes that crypto industry should also be as transparent as any other industry existing in India.
It was on 24th March, 2021, when Indian Ministry of Corporate Affairs informed crypto exchanges through a notification regarding this change. The notification required the crypto exchanges to make disclosure of their profits earn and accumulated losses relating to crypto dealings. Furthermore, the notification also sought details regarding deposits and withdrawals, crypto holding as well as advances.
Ashish Singhal who is the CEO of CoinSwitch Kuber of India stated that the law is not applicable upon crypto exchanges. He was of the view that his crypto trading platform does not maintain data of customers. Especially the data relating to what has come and what has gone out from the customers’ balance sheet, informed Singhal.