Crypto Code: Self-regulation by crypto exchanges is good

Bitcoin suddenly losing value and eroding $113 billion from the market may have raised questions among investors about the instrument’s stability, but Indian cryptocurrency exchanges are still bullish about the outlook on trade in cryptocurrencies. To assure the market that crypto-investments are safe and there is no impropriety, they are imposing some limits on who can trade on these platforms. On Monday, the Economic Times reported that five exchanges have signed a code for trade on exchanges which they will now be forwarding to the ministry of finance and the financial market regulator.

The new measures include mandatory KYC for trading, monitoring bodies to track suspicious transactions and redress complaints, among other measures.

The future of the exchanges, however, depends on whether the government eventually allows them or not. While the Supreme Court struck down an RBI order that circumscribed crypto-trade last year, the government is yet to take a call. Earlier, a government-appointed committee had recommended that cryptocurrency-trade be allowed, but then there was a call for a complete ban. In recent months, there have been conflicting media reports-some have said that the government is mulling a ban while others have claimed that it is trying to bring crypto exchanges under GST. Self-regulation is promising, but sans the approval conventional investment instruments enjoy, investors will remain sceptical. India must carefully examine the examples of Singapore and the US to decide the future course of action.