To ban or regulate? Govt's cryptocurrency paper likely by October 2024
Delhi, Aug 22, 2024
In October 2023, G20 finance ministers and central bank governors adopted the roadmap on crypto assets proposed in the synthesis paper, calling for its swift and coordinated implementation
A much-anticipated consultation paper on cryptocurrency (crypto) is expected to be released by September or October this year, according to a senior finance ministry official. The paper will seek to determine whether to ban or legalise crypto.
“The consultation paper will gather input from various stakeholders, including the Department of Revenue, the Financial Intelligence Unit (FIU) — India, and global bodies. It is expected to be released by September or October,” said a senior government official.
In September 2023, the International Monetary Fund-Financial Stability Board (IMF-FSB) published a synthesis paper presenting guidelines for countries and a road map for crypto regulations. The paper offers insights into investor protection, cybersecurity, anti-money laundering, and counter-terrorism financing measures.
In October 2023, Group of Twenty (G20) Finance Ministers and Central Bank Governors (FMCBG) adopted the road map on crypto assets proposed in the synthesis paper, calling for its swift and coordinated implementation. The joint communiqué, issued after the final meeting of the FMCBG under India’s presidency in Marrakech, urged countries to implement policy frameworks. It advocated outreach beyond G20 jurisdictions, global coordination, cooperation, and information sharing, as well as addressing data gaps.
“We ask the IMF and FSB to provide regular and structured updates on the progress of implementing the G20 road map on crypto assets. We support the ongoing work and global implementation of a financial action task force standards on crypto assets,” the communiqué said.
Earlier, Business Standard reported that FIU received requests from four additional offshore crypto exchanges to operate in India again. However, at the beginning of 2024, India banned nine crypto exchanges — Binance, KuCoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfinex — for non-compliance with anti-money laundering laws in the country.
“Apart from KuCoin and Binance, we have received four more requests from offshore crypto exchanges,” said the senior government official.
Currently, there are 46 registered crypto entities. With KuCoin and Binance, the total number of such entities will increase to 48.
Lack of norms impeding WazirX probe: Official
A senior finance ministry official mentioned that the government is closely monitoring cryptocurrency (crypto)-related hacks and frauds in the country, including the $230 million loss suffered by WazirX due to a cyberattack on July 19, 2024.
“A team from Financial Intelligence Unit (FIU) — India investigated the Mumbai office of WazirX in July 2024,” said an official familiar with the matter.
The official noted that preliminary details about the event were obtained, including information on how the hack occurred, the wallet involved in the transfers, logs, internet protocol addresses, and more.
“One of the major challenges we face is the absence of any kind of regulation in the country. However, in the case of WazirX, we are continually in touch with them and requesting the necessary details,” said another official.
Crypto platforms are required to register with FIU, which is housed in the finance ministry’s Department of Revenue, to operate in India. The unit also investigates offences such as money laundering.
Nearly a month after conducting a preliminary investigation into the security breach that led to a $230 million loss at WazirX, the embattled crypto exchange claimed that a separate forensic analysis found no compromise of its information technology systems and blamed its wallet service provider, Liminal Custody, for the cyberattack. WazirX said that the investigation was led by cybersecurity firm Mandiant, a subsidiary of technology giant Google.
“While a detailed report is forthcoming, the findings largely indicate that the issue leading to the cyberattack originated in Liminal. The wallet that was attacked was managed using Liminal’s digital asset custody and wallet infrastructure,” WazirX said in a press release.
[The Business Standard]
