Indian bitcoin exchanges plan central repository to keep tabs on deals
14 Feb 2018
Bitcoin exchanges in India are planning to create a central repository of users that will help create and maintain a real time record of transactions. The move comes in response to Finance Minister Arun Jaitley terming the cryptocurrency as illegal, according to an Economic Times report.
Once this is done, the purchase data of buyers and sellers of the virtual currency can be traced through either the Aadhaar ID or the Permanent Account Number (PAN) of the user. Details such as the total number of cryptocurrencies held, their value as well as the pattern of buying and selling by individual users will be available through the central repository.
"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 Blockchain and Cryptocurrency Committee (BACC) of the Internet and Mobile Association of India. The committee has seven cryptocurrency exchanges as members.
Khurana said the BACC aims to submit the proposal to a government committee headed by Economic Affairs Secretary S C Garg during this week. In turn, the government panel is expected to submit its recommendations by March. The government is also expected to appoint a regulator to monitor trade in cryptocurrencies, according to the ET report.
On 1 February while presenting the annual Budget in Parliament, finance minister Jaitley said the government will eliminate the use of crypto assets in financing illegitimate activities.
The Indian tax authorities have sent out an estimated 100,000 notices to investors asking them to reveal profits earned on cryptocurrency trading and to pay the applicable tax. Industry members estimate that in 2017, trade in bitcoin was worth about Rs10,000 crore with around five million Indians actively trading in the cryptocurrency.
Currently, cryptocurrency exchanges require users to submit both the PAN card and Aadhaar number along with bank account details in order to create a trading account. The proceeds from all transactions are credited to the same account. However, as each exchange operates exclusively, this data is not shared.
"There was 'panic selling' for some time (after) FM Jaitley mentioned cryptocurrency (as illegal tender) in his Budget speech. But things have stabilised thereafter," said Nischint Sanghavi, head of bitcoin exchange Zebpay, which follows KYC (Know Your Customer) norms as well as the Anti-Money Laundering (AML) regulations stipulated for the banking sector.
"We are doing everything to have a self-regulated industry and once data pooling begins, verifying customer details will be faster," he said.
The BACC is also planning a "code of conduct" for the industry. "These exchanges don't deal with cash and will adopt the best practices applicable for the banking industry," said Khurana.
Globally, countries like the US and South Korea are also trying to chart out a road map for trade in virtual currencies. Japan was one of the first to introduce regulatory oversight over cryptocurrencies, announcing a new set of regulations in April 2017.
"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.
