Even as cryptocurrency Bitcoin is coming under intense scrutiny worldwide after its prices went on a roller-coaster ride, the Indian currency exchanges handling Bitcoin trade are trying to stay on the right side of the law.
Finance Minister had made a mention in his last Budget speech in the Parliament that the Government considers cryptocurrencies illegal tender and will not recognize any payments or transactions made with them. At the same time the Finance Ministry has set up a committee to review the functioning of the cryptocurrency exchanges and proposes to setup a regulating body on the lines of the Stock Exchanges Board of India (SEBI). Now, the Bitcoin exchanges in India plan to create a central repository of clients and will ultimately put in place a self-regulatory mechanism to appear transparent.
This move comes amidst reports of the Income Tax authorities sending out notices to 100,000 investors in cryptocurrencies asking them if the amount they have invested have been reflected in their income statements and the corresponding taxes have been paid by them or not.
By this move by the Bitcoin exchanges, the details of the buyers and sellers of the digital currency through the exchange can be traced through their Aadhaar or PAN numbers. The repository will also hold information on the details of the transactions, including the frequency of the transactions and the pattern etc.
In fact, going one step ahead, the exchanges will submit the details of their proposed repository to the committee being setup by the Indian government, which is expected to submit its recommendations to the government before March 31. In the current scenario, though the individual cryptocurrency exchanges follow the normal KYC norms of registering the identity of the dealers on their exchanges, the overall information does not get shared among the exchanges.
As mentioned, the proposed move to create a central repository of information is meant to present to the government that they are self-regulating institutions and will not permit any illegality in their transactions, including money-laundering by the customers on their platforms. They intend on creating a “code of conduct” for their members and customers.