Mumbai:

The new Cryptocurrency bill 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 Know Your Customer (KYC) data of investors that crypto exchanges have collected from clients.

According to two people aware of the development, the new regulations would mandate cryptocurrency exchanges to share their KYC data, which mainly includes details of their investors, with the government.

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. 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.”

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.

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