Crypto exchanges ready to share suspicious transactions with government

Uncertainty surrounds crypto in India as well as in most other parts of the world. The government has recently tightened oversight by bringing crypto companies under the purview of money laundering provisions. DH‘s Gyanendra Keshri spoke to Sumit Gupta, co-founder and CEO of crypto exchange CoinDCX to understand the implications of the new regulations for crypto businesses and what the future holds. Excerpt.

How will the recent anti-money laundering and KYC guidelines affect crypto businesses?

The beauty of blockchain is that no matter what transaction happens, it is traceable. It is available for anyone to view at any time. From day one, every single customer on our platform is KYC verified. We have a strict process when it comes to onboarding customers. We have self-imposed some protocols, not only related to KYC, but also other standards that must be followed for financial transactions.

Do crypto exchanges monitor suspicious transactions and are they ready to share it with the authorities?

Regarding the reporting of suspicious transactions, we had asked for clarity. There was no reporting entity. We didn’t know who to report it to. Now I am glad that clarity has come. And we have some tools in place to track suspicious transactions. This is similar to what has been used by financial institutions such as banks. It will be implemented.

What are the KYC standards followed by crypto exchanges?

It is more or less similar to what is followed by banks and other financial institutions.

How do you see the regulatory framework evolving for crypto?

Globally, countries are coordinating to regulate it. Crypto regulation is part of the G20 agenda this year. Most countries are in line with the common framework for regulating this asset class. We are moving in a direction where this space must be regulated. We have moved out of the discussions where there was talk of banning it. There is no question of that now. Now the people are talking about the nuances of how it should be regulated.

We hope that there will be a global consensus on what the regulations should look like. In the short term you may see friction and challenges, but in the long term we believe that this space needs to be regulated, and we are moving in that direction.

What kind of regulation is the crypto industry looking forward to?

We look forward to progressive regulation. It is important to regulate this space. It should be regulated in an open and progressive manner. The regulations should not be very strict which kills innovation. We are positive. We are waiting for progressive regulations. It may take time, but we hope that we will get there.

RBI has been very critical of cryptocurrencies. Governor Shaktikanta Das has likened it to gambling. How do you see RBI’s stance on crypto?

I will not comment on what the RBI has to say. However, much confusion is due to the use of the term currency. Let’s be absolutely clear, crypto is not a currency. It is a resource. The government calls it a virtual digital resource. We must call it crypto assets not cryptocurrency.

Are you facing difficulty raising funds due to regulatory uncertainty?

Not really. I just want to talk about CoinDCX. We already have very strong reserves and we do not need to raise more capital from the market. We are well capitalized.

If the regulation, when it comes out, is not positive, what will be the future of crypto?

We will continue to work hard. We will continue to talk to decision makers and other stakeholders, because we fundamentally believe that this is the future and we will continue to work in the same direction. We have done this for the past five years. Many of the Internet-based applications that we see today will utilize blockchain technology in the coming years. As for CoinDCX, we are here to properly nurture and grow the industry.

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