Indian Cryptocurrency Exchanges Plan to Maintain Shared User Database

Cryptocurrency exchanges in India intend to set up a database of transactions and crypto traders. Information about user accounts would be linked to an account number or Aadhaar ID. This policy is being introduced as the Indian authorities attempt to regulate cryptocurrencies.

A Crypto Trader Database

The Economic Times reports that Indian cryptocurrency exchanges want a central user repository, which will record transactions in real time. These exchanges belong to the BACC (Block Chain and Cryptocurrency Committee) of the IAMAI (Indian Mobile and Internet Association). In total, seven crypto exchanges belong to this organization.

Committee head, Ajeet Khurana, stressed that the organization plans to submit this proposal, among others, to the government department that is researching cryptocurrency matters. 

According to a leading industry member, this will enable the transaction data of sellers and buyers of bitcoin (BTC) and other virtual currencies to be traced, via the users’ account number or Aadhaar ID. Data like the total quantity of bitcoin held, its’ value and the pattern of selling and buying by specific users will be accessible via the central user repository.

The Aadhaar ID is a unique, twelve digit number given to every Indian resident, depending on their demographic and biometric data. This is the biggest biometric identification system in the world, with more than 1.19 billion members as of November 2017. 

The account numbers are unique codes comprised of ten characters, which serve as identification for families, individuals, and corporate entities, particularly those who are liable for income tax. These are given to foreigners with valid visas and Indian citizens.

Khurana said that BACC intends to put forward its’ proposal soon to the government department led by SC Garg — the Economic Affairs Secretary. The government department will offer its’ recommendations in March, and assign an official to oversee cryptocurrency trading.

Crypto Laws in India

In early February 2018, Khurana stated that the government in India wants to clarify its’ rules concerning crypto exchanges and cryptocurrencies. In his estimation, five million Indians either use cryptocurrency at the moment, or they have used them at some point previously. This figure, he predicts, is set to rise.

Khurana went on to say that Indian exchanges do not permit foreigners to take part, and foreign exchanges are not allowed to operate. Essentially, the Indian cryptocurrency market works independently of the rest of the world. Notwithstanding, this market is still highly active. 

When comparing the transactions carried out on cryptocurrency exchanges with those on the stock exchanges or forex markets, it is clear that they are on a similar level. Khurana also said that the laws governing Indian cryptocurrencies are taking a while to draw up, due to technological complexities and disputes about who should oversee them.

It appears as if many countries are attempting to bring something that is inherently borderless under control. On the face of it, this would seem to be a tall task. One of the main advantages of bitcoin, compared to fiat currency, is that it is free of central regulation and cuts out the middleman. For this reason, many people will regard any regulatory efforts as a waste of money and time.