India’s Ministry of Electronics and Information Technology (MeitY) is the latest Indian government agency to pay attention to the digital currency market. A new directive issued by the Indian Computer Emergency Response Team (CERT-in), a subdivision of MeitY, introduces new data collection requirements for digital currency businesses.
CERT-in requires all virtual asset service providers, digital currency exchanges, and custodial wallet providers to store all their user information for five years; this includes Know Your Customer (KYC) and financial transaction records.
“Virtual Asset Service Providers, Virtual Asset Exchange Providers and Depository Wallet Providers (as defined by the Ministry of Finance from time to time) are required to retain all information obtained under of Know Your Customer (KYC) and records of financial transactions for a period of five years to ensure cybersecurity,” the directive states.
Likewise, the directive also applies to data centers, virtual private server (VPS) providers, cloud service providers and virtual private network (VPN) service providers. The rule is set to go into effect on June 22.
CERT-in expects specified agencies to comply with any request for data within six hours if the need arises. This will help the ministry quickly address cybersecurity threats, the agency said.
Is India chasing the digital currency market?
Although CERT-in noted that the rule is supported by India’s Information Technology Act 2000 relating to Information Security Practices, Procedures, Prevention, Response and Reporting of Cyber Incidents for a Safe Internet and reliable, the controversy remains.
Indian user on Twitter noted that the rule amounts to the government taking control of citizens’ privacy and is unconstitutional. Meanwhile, the rule also comes on top of other recent laws that have impacted the Indian digital currency market.
Last March, the Indian parliament passed the Finance Bill 2022-2023, which introduced a new tax regime for digital assets, including currencies and NFTs. Finance Minister Nirmala Sitharaman’s proposed budget imposes a 30% tax on gains from trading or donating assets.
India always gives clear recognition to digital currencies. The National Payments Council of India (NPCI), which runs the state-backed Unified Payments Interface (UPI), continues to give digital currency exchanges a hard time.
Reuters reports that several major exchanges have ended rupee deposits and withdrawals through the system. All of these have significantly affected the trading volume of exchanges and the desire of new digital asset companies to exit the country.
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