Uncertainties continue to surround crypto in India as also in most other parts of the world. The government recently tightened oversight by bringing crypto businesses 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 on crypto businesses and what the future holds. Excerpts.
How will the recent guidelines related to money laundering and KYC impact crypto businesses?
The beauty of blockchain is that whatever transaction happens, it is traceable. It is available for anyone to see anytime. Right from day one, every single customer on our platform is KYC verified. We have a stringent process when it comes to onboarding of customers. We have self-imposed some protocols, not just related to KYC, but also other standards required to be followed for financial transactions.
Do crypto exchanges monitor suspicious transactions, and are they ready to share it with the authorities?
As regards the reporting of suspicious transactions, we had been asking for clarity. There was no reporting entity. We didn’t know who it should be reported 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 applied by financial institutions like banks. It will be set into action.
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 aligning to regulate it. Crypto regulation is a part of the G20 agenda this year. Most countries are aligned on the common framework for regulating this asset class. We are moving in a direction where this space has to be regulated. We have moved out of the discussions where there were talks of banning it. That’s not the talk now. Now the people are talking about the nuances about how to regulate it.
We are hopeful that there will be a global consensus on how the regulation should look like. In the short-term you might see frictions and challenges, but in the long-term we believe that this space has to be regulated, and we are moving in that direction.
What kind of regulation is the crypto industry looking forward to?
We are looking forward to a progressive regulation. It is important to regulate this space. It should be regulated in an open and progressive manner. The regulation should not be very stringent which kills innovation. We are positive. We are waiting for progressive regulations. It might take time, but we are hopeful that we will reach that.
RBI has been very critical about cryptocurrencies. Governor Shaktikanta Das has equated it with gambling. How do you see the RBI’s stand on crypto?
I would not comment on what RBI has to say. However, a lot of confusion is because of the use of the term currency. Let’s be very clear, crypto is not a currency. It’s an asset. The government calls it a virtual digital asset. We need to call it crypto asset not crypto currency.
Are you facing problems in raising funds due to the regulatory uncertainty?
Not really. I will talk about CoinDCX, only. We already have very strong reserves and we don’t need to raise more capital from the market. We are well capitalised.
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 policymakers and other stakeholders, because we fundamentally believe that this is the future and we will continue to work in the same direction. We have been doing this for the last five years. A lot of the internet-based applications that we see today will be leveraging blockchain technology in the coming years. As far as CoinDCX is concerned, we are here to nurture and grow the industry in the right manner.