Crypto Bill to Empower SEBI, RBI, Tax Authorities to Scrutinise KYC Data of Exchanges

Crypto Bill to Empower SEBI, RBI

The new Cryptocurrency bill is set to mandate cryptocurrency exchanges to share their Know Your Customer (KYC) data, which mainly includes details of their investors, with the government, according to two people aware of the development.

It is set to empower regulators and government agencies including the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and the tax department to scrutinise KYC data of investors that crypto exchanges have collected from clients.The KYC data could help regulators zero in on transactions across platforms, check that against bank deposits and even calculate or scrutinise gains and other discrepancies.

Further, the new cryptocurrency framework will also put in place a uniform KYC process that every exchange must adhere to, they said. As things stand today, different cryptocurrency exchanges have different KYC processes.“KYC data will become the key for any scrutiny by any regulator,” one of the persons aware of the development said. “And unless this is spelled out in the law and made mandatory, the cryptocurrency operators (exchanges) need not share it.”

However, many in the government fear that several cryptocurrency investors could be operating multiple accounts not just across platforms but even with multiple banks and NBFCs where their money is eventually deposited.

Insiders say because most banks have stayed away from providing services to exchanges, cryptocurrency transactions are structured in a different manner. And the regulators may find it hard to scrutinise this data.

“So, if you look at bank accounts, you will just see a transaction or a deposit from another bank, and not really a deposit from a cryptocurrency exchange. So, for instance, the income tax department wishes to scrutinise crypto transactions, the bank or NBFC may not really know how to segregate those transactions,” said another person aware of the development.


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