India’s burgeoning crypto business is considering self-regulation and is crafting a set of guidelines to ensure it. The Internet and Mobile Association of India will monitor the process, which will be reviewed by a board (IAMAI).
The Internet and Mobile Association has established a formal board to assess issues, implement best practices, and get as near to official regulation as feasible in India’s expanding but unregulated cryptocurrency market, the association announced on June 1.
The IAMAI’s Blockchain and Crypto Assets Council would establish a formal board of lawyers, technological experts, and fintech compliance experts to assure self-regulation.
“Crypto exchange business activity is legal in India today, but it is not formally regulated yet. There are no prescriptive guidelines. We are trying to make sure the serious players can follow the best global practices,” Naveen Surya, Chairman, Fintech Convergence Council and Chairman Emeritus of Payments Council of India (PCI) told Moneycontrol.
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According to a person familiar with the situation, the board and exchanges will come up with practices over the next few months, including regular audits and inspections, a mechanism for customer redress in cases of fraud, and the establishment of an escrow account specifically for crypto transactions.
“We need to reduce the overall risk and perception of risks. Our purpose is to communicate and to bring it (self-regulation) as close to proposed core principles of likely regulation as possible,” Surya said.
Moneycontrol first reported on May 12 that banks and exchanges are working with the IAMAI to find a solution to the deadlock between banks and exchanges.
Despite legal uncertainties, the crypto industry has been clamoring for regulation in recent months, as exchanges have seen record investment activity.
The Reserve Bank of India (RBI) reiterated on May 31 that banks cannot use the RBI’s 2018 rule banning cryptocurrencies to suspend users’ bank accounts or question them about cryptocurrency transactions. The restriction was declared unlawful by the Supreme Court a few months ago.
Industry sources believe that while exchanges already follow a few self-imposed standards, such as insisting on Know Your Customer (KYC) requirements and adhering to the Prevention of Money Laundering Act (PMLA) guidelines, more actions are needed.
Self-regulation is a start toward addressing some legality and fraud concerns, but it cannot be a substitute for true government regulation, according to these individuals.
The industry now lacks a clear solution or redress mechanism for cases of fraud, embezzlement, and the presence of rogue actors.
“If you (the government) can regulate the Futures and Options (F&O) market, this is much easier. The idea is to put mechanisms in place and evolve and strengthen these processes to mitigate risks,” Surya said.
According to sources, most of the crypto industry’s and consumers’ concerns might be resolved in the next 12-18 months if self-regulation works and the government follows suit.
“It is well known that with 15 million users and upwards of 10,000 crores held by small investors, India is among the top players globally in the crypto market, and for the welfare of the users, it is very important that crypto assets are regulated. This is a good move by the RBI and positive news for the crypto industry. It is a good sign that India is moving towards more acceptance and awareness amongst the mainstream markets and regulators and would help in shaping the crypto-assets market,” IAMAI-BACC said in a statement.
Source: MoneyControl.com
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