Polygon Demands KYC Details to Offer Financial Service in India

Key Takeaways

  • Reports reveal the move is owing to “increased scrutiny” from the Government
  • Reportedly, the move is part of Polygon’s bid to stop funding projects in India.

Decentralized Ethereum scaling platform Polygon now requires KYC (Know Your Customer) details to provide financial service to potential partners in India, according to a report.

According to the report, funding, investments, grants, or financial support from Polygon require submission of extensive KYC details. The source states that Polygon is trying to be “extremely compliant,” according to the person, at a time when regulators’ scrutinization has only seen a surge.

The source points out that no grants would be given to people unwilling to share their KYC details. “Anybody legit should not be reluctant to share KYC details and therefore to avoid procedural delays. It is a requirement going forward”, the source in the report said

This move is, however, viewed by many as Polygon’s bid to stop funding /investing in projects in India. In reply to this supposed “rumor”, sources familiar with the matter have said move is owing to increased government scrutiny and does not indicate a complete pause on funding to Indian projects.

The Government has announced many anti-crypto moves in the past few months. RBI governor has recently talked about how crypto has no “underlying value”. Union Finance Minister Nirmala Sitharaman, in the Union Budget 2022, announced that “any income from transfer of any virtual digital asset shall be taxed at the rate of 30% .” The finance ministry also announced a 1% tax-deductible at source, or TDS, on all digital-asset transfers above a certain size, starting July 1. Apart from this, an Indian Minister Sushil Modi even suggested the Government put a 50% tax on crypto.

The Government cut off payment processors from local exchanges after the rough local launch of crypto exchange Coinbase. Crypto investors in India believe the move, combined with the Government’s decision not to permit offsetting of trading losses in digital assets, would trigger an exodus of crypto companies from India. Some reports also suggest that the Government may soon introduce a new tax for decentralized finance (DeFi) platforms.

With increased Government scrutiny and regulations, the only way crypto firms can come in the good books of the Government is by projecting crypto offerings as ‘safe and secure.’ And, Polygon is doing just that by seeking KYC details to provide financial services.

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Saniya Raahath

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