This was done following the crypto community’s
first-ever meeting with the Reserve Bank of India (RBI) earlier this month, people familiar with the development said.
IndiaTech also suggested developing a central filtration process that allows only certain coins to be listed. At present, crypto exchanges have an internal framework to determine which coin to list.
The recommendations assume significance amid
speculation of a ban on trading of virtual currencies and
growing concerns around customer protection and anti-money laundering activity. The government is set to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 for consideration in the upcoming Winter session of parliament.
“Given the current situation, crypto exchanges are willing to work on a common data sharing practice if that assuages the government and regulators,” a person aware of the discussions said.
The suggestions have been drawn up by evaluating and comparing the Financial Action Task Force (FATF) recommendations and other KYC requirements and practices followed in the country.
“We have been constantly giving inputs to the government after the release of the White Paper over multiple things in the last few weeks,” said Rameesh Kailasam, president and CEO of IndiaTech. He did not comment on the specifics of the recommendations to and discussions with the RBI. “There are a lot of dependencies that came out of the process, and we have shared our recommendations with the regulator as well as the government.”
The talks between the industry body and the RBI are aimed at safeguarding users and to better map their exposure to cryptocurrency across platforms, people briefed on the matter said.
At present, only a few crypto exchanges undertake a stringent approach to KYC verification, and the practice is not uniform across exchanges. Since the exchanges operate through a self-regulatory code of conduct, there is no way to enforce uniformity.
According to a document reviewed by ET, crypto exchanges do not have a way to monitor non-resident external and non-resident ordinary accounts.
Members of the parliamentary standing committee on finance
also met crypto industry representatives this month to discuss the future of cryptocurrency.
“They (IndiaTech) have also recommended mandating submission of KYC documents for all transactions without any minimum threshold,” one of the sources said.
According to industry insiders, the Bill was still being written as of Wednesday and the contours of it were being finalised.
According to the Lok Sabha bulletin published on Tuesday, the Bill “seeks to prohibit all private cryptocurrencies in India” but allows for “certain exceptions to promote the underlying technology and its uses.”
The language was similar to the one used earlier this year when talks of an outright ban on cryptocurrency first emerged. However, people in the industry said discussions have come a long way since and the current description can be interpreted in several positive ways.