The crypto-currency industry has finalised its draft Code of Conduct for blockchain and crypto-firms in India. The code mandates all players to maintain transaction and customer data for seven years, in addition to norms on Know-Your-Customer, insider investments, external audits, and various customer protection measures. MediaNama has seen a draft of the Code of Conduct prepared by the domestic crypto-currency and blockchain industry under the aegis of the Internet and Mobile Association of India (IAMAI).
At the outset, the draft says that members of the Blockchain and Crypto Committee (BACC) of the IAMAI will need to follow the Reserve Bank of India’s rules on KYC and Anti-Money Laundering norms, in addition to company and taxation laws.
“The central premise of this code is that BACC will provide guidance to the members to ensure the highest level of business integrity and comply with applicable rules and regulations laid down by the various regulatory authorities in India. This Code of conduct is based on set of standards which are to be adhered to by members which are committed to working together with customers, markets and regulators for the establishment of ethical and professional standards.” — IAMAI draft Code of Conduct of blockchain and crypto asset committee
Ever since the Supreme Court struck down the RBI’s April 2018 circular, which barred banks from providing services crypto-firms in India, the domestic industry has been regulating itself. The Internet and Mobile Association of India (IAMAI), which had challenged the RBI’s circular, has been working with leading crypto-exchanges on the code of conduct policy for the past few months. Some of the companies that worked on the policy include Wazir X, CoinDCX, UnoCoin, and ZebPay among others.
The IAMAI’s Code of Conduct may be late, now that the government plans to introduce legislation to ban ‘private’ crypto-currencies. However, in an uncertain regulatory environment the draft code does provide nascent blockchain and crypto entrepreneurs some guidance until regulation takes shape. It further states that members should put up transparent information about their legal governance and ownership structure, treat customers fairly, risks of the business are clearly explained and protect customers from fraud. Signing up to the Code is voluntarily, the draft says. Firms that sign on the IAMAI’s Code will have to abide by the following conditions:
- Follow confidentiality policy when there is access to non-public information
- Transaction Monitoring Process should be set up to monitor suspicious transactions
- All monies for transactions should come from the on boarded customers own account only
- Training of employees should be conducted to handle transactions and compliance with regulations
- Each blockchain and crypto firm needs to set up an operations department to manage day-to-day operations
- Member exchange should maintain fiat and Crypto amounts equivalent to or more than total customer liability at any given point of time
- No employees or executives of BACC members should buy or sell a crypto-token 10 days before or after the listing of that token on their own exchange
Data storage requirements
- Use proof of customer address and identify for KYC
- All transactions between one crypto entity and crypto exchanges should be recorded
- All transactions and customer on-boarding should be preserved for up to 7 years for any inspection
- Name of the Customer, Type of Crypto, Amount, Rate, Date, Payment mode, Account number should be stored
- Bank account details should be stores and all money flows should be received or paid-out to the customers’ account
Customer protection requirements
- Create a customer service manual
- Maintain details of all customer disputes
- Set up a customer redress al mechanism
- Maintain records of all customer complaints and settlements/solutions and average solution time
- Transparency on fees
- Conduct regular staff training
- Annual audit with external auditors
- Maintenance of books of account, transaction and KYC records should be maintained as per highest standards
MediaNama has prepared a guide on crypto-currency regulations in India, listing the government’s position over the last few years and various policy recommendations; read it here: A complete low-down on crypto-currency regulation in India.