More On: Bitcoin
The action is viewed as a welcome step that provides clarity to the crypto business on a number of fronts.
In a move that establishes which body has power over suspicious or unlawful activity in the sector, India identified the country's Computer Emergency Response Team (CERT) as the national agency for cyber security, including the crypto business.
The new rule requires crypto businesses, such as virtual asset service providers, to keep know-your-customer (KYC) information and financial transaction records for five years in order to "ensure cyber security in the area of payments and financial markets for citizens while protecting their data, fundamental rights, and economic freedom in light of the growth of virtual assets."
While the sector sees the news as a gentle step toward regulation before crypto-specific legislation is adopted, the government has made no such claim. The rule to tax crypto enterprises before crypto-specific legislation, unveiled in February, was a similar, but much tougher, step. A top finance ministry official stated at the time that "just because it gets taxed does not make it legitimate."
India's crypto law is still in the works, with the government seeking worldwide agreement and Indian Finance Minister Nirmala Sitharaman highlighting the promise of crypto and blockchain, as well as safety concerns.
"Blockchain itself is so rich in possibilities, not just in the financial arena, but in a plethora of others." "Last week, she stated. "We have no intention of harming this (cryptocurrency or blockchain)." She did, however, add that "It may also be exploited for less desired purposes, like as money laundering or facilitating the financing of terrorism."
This is the first time the government has said that the data must be kept for a period of five years. KYC methods and data must conform to the rules of three organizations: the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Department of Telecom (DoT).
To maintain an open line of communication on these new laws, crypto firms must select a point of contact with CERT, a unit of the Ministry of Electronics and Information Technology.
Sitharaman called for "joint global action" to effectively regulate this dynamic technology at a public event on Friday.
"If there is impatience in the world demanding, 'What are you doing about cryptocurrency?' I understand your frustration, but that's how it's going to be "She stated this during a recent fireside talk at Stanford University. "It will take some time for all of us to be certain that, at the very least, we are making an informed decision based on the knowledge we have at our disposal. It cannot be hurried."
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