Crypto exchanges may have to get licenses from regulator to conduct business in India: Reports

Like exchanges in the equity markets, crypto platforms will have to fulfil a host of eligibility criteria including meeting minimum net worth and governance guidelines before being granted license to conduct business in India.

They may also be asked by the designated regulator to present a business plan to check their long-term sustainability. The regulator may direct the crypto platforms to follow know your customer (KYC) norms. To prevent money laundering and other illicit activities, the designated regulator is likely to ask crypto exchanges to establish disclosure mechanisms, the ET report added.

To safeguard small investors, the government is also planning to bring in regulations that prescribe a minimum threshold for investment in virtual currencies. Crypto exchanges will be given time to comply with the eligibility norms under the new regime, according to the report.

Violation of the new norms could lead to a company being fined Rs 200 million ($2.7 million) or face imprisonment for 1.5 years, a Bloomberg report said.

According to the official, the government could consider allowing the National Stock Exchange and the Bombay Stock Exchange to set up separate crypto windows like the commodity and currency segments they currently have.

The government has already discussed these points with regulators and other stakeholders, the official said.

Although the government plans to have a separate independent regulator for cryptocurrencies, demand for multiple regulators overseeing the complex asset is also gaining ground.

According to Bloomberg, the Centre may consider appointing capital markets regulator Sebi to oversee cryptocurrencies.