The Indian Ministry of Information Technology has ordered digital currency exchanges to keep customer data for five years

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The Ministry of Electronics and Information Technology (MeitY) of India is the most recent Indian government department to take notice of the digital currency industry. New data gathering regulations for digital currency enterprises have been published by the Indian Computer Emergency Response Team (CERT-in), a branch of MeitY.

All virtual asset service providers, digital currency exchanges, and custodial wallet providers are required by CERT-in to save all customers’ data for five years, including Know Your Customer (KYC) and financial transaction data.

“The virtual asset service providers, virtual asset exchange providers and custodian wallet providers (as defined by the Ministry of Finance from time to time) shall mandatorily maintain all information obtained as part of Know Your Customer (KYC) and records of financial transactions for a period of five years so as to ensure cyber security,” the directive stated.

The regulation covers data centers, Virtual Private Server (VPS) providers, cloud service providers, and Virtual Private Network Service (VPN Service) providers. The regulation is expected to take effect on June 22.

If the need arises, CERT-in expects the mentioned entities to respond to any requests for data within six hours. According to the organization, this will assist the ministry in quickly addressing cybersecurity concerns.

11 exchanges hit by regulators in India - CoinShark

Is India pushing the digital currency business to extinction?

According to CERT-in, the law is supported by India’s Information Technology Act of 2000, which governs information security policies, processes, prevention, response, and reporting of cyber events for a secure and trustworthy internet. However, there is still debate.

According to one Indian Twitter user, the law equates to the government assuming control over people’s private lives, which is unconstitutional. Meanwhile, the rule is another recent regulation that has influenced the Indian digital currency sector.

The Finance Bill 2022-2023, which created a new tax framework for digital assets, including currencies and NFTs, was enacted by the Indian parliament in March. Finance Minister Nirmala Sitharaman’s 2018 budget levies a 30% tax on profits from selling or donating assets.

India continues to offer unequivocal recognition to digital currencies. The National Payments Council of India (NPCI), which runs the government-backed Unified Payments Interface (UPI), makes life difficult for digital currency exchangers.

According to Reuters, many big exchanges have stopped accepting rupee deposits and withdrawals via the system. All of this has had a substantial impact on exchange trading volumes and the desire of new digital asset enterprises to leave the nation.

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