What Impact Will The CIO’s New Storage Rule Have On The Crypto Industry? – Tech Tribune France

In a recent circular, the Ministry of Electronics and Information Technology made it mandatory for all virtual asset service providers to store “know your customer” (KYC) details and transaction records of their users for a period of five years. Crypto industry experts have cited this as a positive step towards compliance and user safety on crypto platforms. However, some experts felt that this resulted in an increased compliance burden for exchanges.

“These new data storage guidelines increase the compliance burden for exchanges. The high cost of compliance could lead them to explore new geographies. This will test the resilience of exchanges that are already struggling with low trading volumes, as well as the phantom ban on banking and payment services,” says Sharat Chandra, VP, Research and Strategy, EarthID , a blockchain platform.

Kazim Rizvi, founding director of The Dialogue, a public policy think tank, believes, however, that the stated aim of the recent CERT-In directive is to bridge the gap in cyber impact analyzes by having access to more information and data to improve cyber security.

“The guidelines oblige service providers (VPS, VPN, etc.), intermediaries, data centers and legal entities to synchronize the clocks of ICT systems, retain user data for five years and report cyber incidents. . In addition, it requires virtual asset service providers, virtual asset exchange providers, and custodial wallet providers to retain all KYC information for five years on a mandatory basis,” he says.

It requires virtual asset service providers, virtual asset exchange providers, and custodial wallet providers to retain all KYC information for a period of five years.

It is important to note that the recent rule only affects cryptocurrency exchanges that hold custody of crypto wallets on behalf of their users. In a custodial wallet, you won’t have full control of your funds, or the ability to sign transactions and manage your private keys yourself.

Dileep Seinberg, and founding CEO of MuffinPay, a bill payment and utility token service, says the move “indicates that the government is positive on crypto and needs better controls and regulations similar to those in place for mutual funds. , acts and obligations”.

“This should motivate stock market investors looking for new avenues of investment,” he says.

Rizvi explained that this directive has multiple implications at the market level. The first would be that as entities are pushed to connect their ICT systems to the National Informatics Center (NIC) or National Physical Laboratory (NPL) NTP (Network Time Protocol) server, this would impact service providers , which could disrupt services and impede incident response. Second, imposing required vendor retention on VPN service providers could compromise its trust quotient, thereby impacting its business. Additionally, compromising the VPN would also impact Indian businesses that use the VPN.

Additionally, the KYC requirement is broad and could impact the operations of cloud service providers.

“The customer information sought under this requirement is sensitive and could deter consumers from using cloud services. As the Indian cloud market grows and we have branded India as a global cloud computing hub, it is imperative that we refrain from imposing additional burdens which may not help CERT-In achieve its objectives, while at the same time it could affect cloud growth in India,” Rizvi adds.

Gaurav Mehta, founder of Catax, a crypto-taxation, auditing and forensics startup, said it will assist the FIU (Financial Intelligence Unit), CBDT (Central Board of Direct Taxes), NATGRID (National Intelligence Grid) and other laws. law enforcement agencies achieve their goals faster by helping them provide detailed information on crypto investments, wallets, money laundering, evasion, and other previously susceptible illicit activities.

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What Impact Will The CIO’s New Storage Rule Have On The Crypto Industry? – Tech Tribune France


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