Polygon Tightens KYC Verification Process for Potential Investments and Grants in India
Polygon has recently increased the requirements for Know Your Customer (KYC) to provide funding and grants to potential associates as regulatory scrutiny increases in India.
Regarded as one of the most versatile Layer 2 solutions, Polygon is a web 3.0 startup that has recently changed its internal policy of customer verification for grant and investment approval in India. In the recent disclosure, Polygon is setting an objective to be “extremely compliant” in its investments. This follows the incessant crypto regulations by the Indian Government, which seems not to be in favour of the virtual financial sector.
Moreover, with the current state of crypto affairs in India, Polygon’s decision is justifiable as the crackdown on the crypto ecosystem puts their investments and interests on a swing balance.
This means that before any team or individual sets out for grant seeking in Polygon, an extensive query on their authenticity is required. This projection might cause stagnation in its overall growth and development. Some sources also believe that funding might have halted completely. This assertion was due to the difficulty in securing grants or funds for their projects.
However, anyone willing to partner with Polygon in these uncertain times must be ready to provide many documents and go through intensive processes for the reception. A source that spoke to CoinDesk said, “Anybody legit should not be reluctant to share KYC details and avoid procedural delays. It’s a requirement going forward.”
Crypto Regulation in India
To put into perspective, the Indian Government, alongside its Central Bank Reserve Bank, is finalizing consultation papers on virtual currencies. This only shows that Indian financial institutions are very ready to clamp down on the freedom and functionality of the virtual financial ecosystem, which puts ecosystems like Polygon at risk of loss.
As much as India is set to launch its Digital Currency (CBDC), its Central Bank, RBI, remains non-receptive to the adoption of cryptocurrencies. After the May 16th crash of Terra network (LUNA) and its native stablecoin (UST), one of the Indian Governors, Shaktikanta Das, warned against investing in the cryptocurrency market, maintaining that investors are overexposed in events like that as such assets have no backing whatsoever, “not even a tulip”.
In addition to this news, from the 1st of July 2022, the country’s government would take into effect the 1 percent tax deducted at source (TDS) on the consideration of every trade. They asserted that the TDS system is a better mechanism to prevent tax evasion and better track crypto transactions.
This stance proves to be extremely controversial for the crypto market participants in India, especially exchanges. The dynamics of this policy are still not very certain because it doesn’t clarify how TDS will be calculated and how exchanges will share the said data with the government. The crypto sector had requested a reduction in the percentage, or it’ll adversely affect the market because this policy discourages active day-traders due to the incessant decrease of a trader’s income.
They believe that cryptocurrencies are a threat to macroeconomic stability and that regulation is proving to be a huge hurdle unless there’s broad and general agreement among economies.
Is There Any End To This For Indian Crypto Developers?
The constant regulatory policies are a huge red flag for potential VC funding for Indian developers. Even if Polygon’s verification method becomes hectic so as to ensure better recipients for their grants, they’ll ensure that their collaterals from the candidate are organized enough to offset their loss.
Actually, a proposal has been made by Indian Crypto institutions to the Government requesting that the regulation will be better if the cost of trading and swapping virtual digital assets (VDA) is cheaper. This would make the community more favorable for both foreign and native firms like Polygon to operate.
Barry Pene is a stern blockchain research/copywriter. Barry has been trading cryptos since 2017 and has been invested in issues that would put the blockchain industry on the right pedestal. Barry's research expertise cuts across blockchain as a disruptive technology, DeFis, NFTs, Web3, and reduction of energy consumption levels of cryptocurrency mining.
