Should Crypto Exchanges Begin Sharing Investor Data?
The Ministry of Corporate Affairs (MCA) announced on Wednesday that companies will have to disclose their holdings in digital currencies, including their profit or loss in crypto transactions, the number of holdings, and any deposits or advances made to the company for the purpose of trading or investing in cryptocurrency. According to experts, the measures should fire up the institutional adoption of crypto assets in India and promote the industry’s growth.
Now, crypto exchanges earn in digital currency, as well as hold and invest part of their profits in these assets. Because of the new law, there is uncertainty about whether the crypto exchanges will have to disclose their customers’ holdings as well.
Nischal Shetty, CEO of WazirX, said he was unsure, but assures that it will be good for the sector since the move promotes complete transparency in the industry. However, Ashish Singal, CEO, and Co-Founder of CoinSwitch Kuber says the rule will not mandate details of exchanges’ customer data. He said since companies like his don’t put users’ balances on their books, it is not their money and therefore the rule does not apply. Singhal though, agrees that sharing user data would be beneficial.
Singhal elaborates that unlike in other countries, whatever cryptocurrency investors are holding and trading is unaccounted for. In other countries, crypto assets are reported to tax authorities against the holder’s identification. A law mandating this in India would work in the same way that stock investment platforms record an individual’s stock brokerage dealings against their PAN card.
Other industry experts seem to be of the same opinion as well, believing that disclosing crypto holdings and transactions will create an inclusive financial ecosystem and boost investor confidence.
Sumit Gupta, CEO and Co-Founder of CoinDCX says the rule will create a regulated environment, a move that has been eagerly anticipated within the industry.