India’s Ministry of Electronics and Information Technology sent down a ruling Thursday with ramifications for the country’s standards for KYC on crypto exchanges and elsewhere in the crypto world.
The rule would require exchanges to keep various kinds of user data for five years, including what some analysts are calling “ownership patterns,” presumably chronicles of an individual’s ownership of digital assets over time.
Exchanges would also have to report all cyber incidents in aid of preventing hacker theft and other liabilities.
In an age where people are just starting to get used to the responsibilities of KYC, this seems to go several steps further in requiring long-term data collection and storage.
Why is this kind of oversight necessary?
Quantexa analysts talk about how more IT monitoring long-term KYC monitoring leads to lower chances of enforcement action.
“(Various factors) underscore the urgent need to make changes in current KYC and risk management practices. More and more companies are concluding that it’s time to move to a more proactive KYC approach, transitioning away from the traditional practice of doing regular periodic KYC reviews and towards continuous KYC monitoring,” spokespersons write. “The benefits of a continuous KYC monitoring approach are not just in cost and time savings … A continuous monitoring approach, using analytic tools to monitor a combination of internal and external data, can quickly identify material changes in a customer’s or supplier’s or business partner’s behavior or risk profile, bringing them to the attention of analysts, risk managers and senior managers for review. And decision-making can be done more quickly with greater confidence and a deeper understanding. “
Another way to put this is that as a dynamic process, crypto trading generates a long paper trail, and having more of that information would seem to benefit the agencies and officials who want to keep tabs on things like crypto gains.
Look for more of this to get baked into KYC requirements as U.S. regulation (and other national initiatives around the world) continues to catch up with crypto.
