Putting the onus on private players for compliance is not that effective. So, a Unified Crypto Wallet with KYC provisions is proposed as a solution.
Crypto regulations are the need of the hour to protect investors and spur innovation and entrepreneurship in India.
Technology think-tank, Policy 4.0 has provided solutions addressing regulatory concerns of the Reserve Government of India regarding crypto assets, in a report.
The report is titled ‘An innovative crypto regulation approach for India – The India Wallet’.
“Wallets are the gateway into cryptocurrency.”
That’s why Policy 4.0 has conceptualized the India Wallet, a single stop Crypto Wallet with all the necessary regulatory steps followed.
Putting the onus on private players, especially the foreign ones, to comply is not working because of the decentralized and pseudonymous nature of digital assets.
So, a unified wallet can be the answer to such problems.
Features of the India Wallet
The India Wallet will allow the Government to track and manage the domestic & cross border cryptocurrency activities of Indians.
Moreover, it will be interoperable with all kinds of cryptocurrency players, both Centralized and Decentralized exchanges, and also blockchains.
An added benefit is that on a blockchain all the transactions can be tracked down. Blockchain Forensics can help the Government make sure that funds are not used for any illicit activities. It will also increase the tax net.
Another quality of the India Wallet will be tighter privacy controls. Users will need to share documents for Know Your Customer (KYC) compliance only to DigiLocker.
This data will not be shared with the private businesses and the Wallet in order to keep identity mapping encrypted by DigiLocker. It will be decrypted only after the order of a Court or the Union Government or if required for any criminal investigation.
So, it is a one-time KYC-ed wallet that can be integrated with crypto exchanges and other wallets
Points of Contention
Will the Wallet be created by the Government or laid down as a technical standard to be followed by private players? Only time will tell.
Crypto assets emerged when some individuals thought of the need for decentralization of the economy. It envisioned a financial system with minimal or no government control and greater anonymity. This Wallet will stand contrary to that ethos.
Moreover, it needs to be determined whether it will be Custodial or Non-Custodial. Given the stock market scams that India has already experienced, for example, the Karvy Demat Scam, it is better to have a Non-Custodial Wallet.
That’s why stocks are also stored in two central depositories incorporated by the Securities and Exchange Board of India (SEBI).
The depositories are CDSL (Central Depository Service (India) Limited) and NSDL (National Securities Depository Limited). Only the owners of the account can transact from these depositories. Brokers do not have any control over them.
Intended Results of the Wallet
The report argues that ultimately, investors will be protected, industry actors will be regulated, and market manipulation will be avoided.
Furthermore, it says a uniform regulatory system will provide an impetus to innovation and entrepreneurship.
This wallet will remain the only legal channel to interact with digital assets. All other channels shall be deemed black money and treated as such.
Do you think a unified single wallet is advantageous for the crypto industry or not? Comment below.
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