Indian Crypto Exchanges Mandated to Store User Info for 5 Years

Key Insights:

• The Ministry of Electronics and Information Technology has issued a new directive.
• All crypto-related businesses have been told to keep user details stored for at least five years.
• The decentralization aspect of crypto is losing touch with the worldwide governments’ interference.

As much as crypto has been cheered, its rapidly increasing adoption has also raised concern from authoritative bodies. As a result, crypto is losing one of its biggest USPs of being decentralized and private.

Indian government interferes

As per a new directive issued by the Ministry of Electronics and Information Technology, the Indian Computer Emergency Response Team (CERT-In) will be responsible for handling all the aspects related to cybersecurity, inducing the following particulars:

• Collection, analysis, and dissemination of information on cyber incidents.
• Forecast and alerts of cybersecurity incidents.
• Emergency measures for handling cybersecurity incidents.
• Coordination of cyber incident response activities.
• Issue guidelines, advisories, vulnerability notes, and whitepapers relating to information security practices, procedures, prevention, response, and
  reporting of cyber incidents.
• Such other functions relating to cybersecurity may be prescribed.

But beyond these responsibilities, the ministry has also focused specifically on the crypto-related business since crypto crime has grown immensely over the years.

Just this year, the crypto space witnessed the biggest hack ever when Axie Infinity’s Ronin Bridge was exploited for $625 million.

However, in doing so, the IT ministry has asked all virtual asset service providers, exchanges, and custodian wallet providers to maintain all information of the users, as well as the records of financial transactions for a period of five years.

Explaining the reason further, the new directive read,

“[…] so as to ensure cybersecurity in the area of payments and financial markets for citizens while protecting their data, fundamental rights and economic freedom in view of the growth of virtual assets.”

The country’s stance on crypto continues to lean in an unfavorable direction ever since the government came up with the 30% crypto tax. The tax has already been criticized by citizens since it is intended to push people away from using crypto.

But India isn’t the only country to interfere in crypto operations.

America and Japan were the first to do so

After Russia invaded Ukraine, countries across the globe began slapping sanctions on the Russian government and oligarchs. But in order to ensure that they are blocked off financially, with no means of escape, many countries started suspending their access to crypto.

The US began the trend, after the White House asked most of the top cryptocurrency exchanges to block Russian sanctioned accounts. While at first there was some back and forth, the exchanges such as Binance, Coinbase, and FTX caved and ended up blocking the accounts.

Japan took a step further, and the country’s Financial Services Agency warned its crypto exchanges that the government would impose penalties if crypto exchanges failed to comply with sanction rules.

Thus, while, on the one hand, crypto makes an advancement, it is forced to take a step back with such incidents.