A long-awaited consultation paper on cryptocurrencies is expected to be released in September or October this year, according to a senior Finance Ministry official who requested anonymity. The consultation paper will attempt to determine whether cryptocurrencies should be banned or legalized.
“The consultation paper will capture inputs from various stakeholders, including the Revenue Department and the Financial Intelligence Unit (FIU) of India, as well as international agencies. It is expected to be released in September or October,” the senior government official said.
In September 2023, the International Monetary Fund and the Financial Stability Board (IMF-FSB) published a synthesis document presenting guidelines for countries and a roadmap for the regulation of cryptocurrencies. The document provides information on investor protection, cybersecurity, and anti-money laundering and countering the financing of terrorism measures.
In October 2023, G20 finance ministers and central bank governors adopted the roadmap on cryptoassets proposed in the synthesis document, and called for its swift and coordinated implementation. The joint communiqué, issued after the final meeting of the G20 Financial Markets Council under the chairmanship of India in Marrakech, urged countries to implement policy frameworks. It advocated for outreach beyond G20 jurisdictions, global coordination, cooperation, information sharing and addressing data gaps.
“We request the IMF and the FSB to provide regular and structured updates on the progress of the implementation of the G20 Roadmap on Cryptoassets. We support the ongoing work and global implementation of the FATF (Financial Action Task Force) standards on cryptoassets,” the statement said.
Earlier, Business standard reported that the UIF-India received applications from four more offshore cryptocurrency exchanges to operate again in India. However, by early 2024, India had banned nine cryptocurrency exchanges (Binance, KuCoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfinex) for non-compliance with anti-money laundering laws in the country.
“In addition to KuCoin and Binance, we have received four more applications from offshore cryptocurrency exchanges,” the senior government official said.
There are currently 46 registered crypto entities. With KuCoin and Binance, the total number of such entities will increase to 48.
A second senior Finance Ministry official mentioned that the government is closely monitoring cryptocurrency-related attacks and frauds in the country. This includes the $230 million loss suffered by WazirX due to a cyberattack on July 19, 2024.
“A FIU-India team investigated WazirX’s Mumbai office in July 2024,” the official familiar with the matter said.
The official noted that they have obtained preliminary details about the event, including how the hack occurred, the wallet involved in the transfers, logs, Internet Protocol (IP) addresses, etc.
“One of the main challenges we face is the absence of any kind of regulation in the country. However, in the case of WazirX, we are in constant contact with them and request the necessary details,” the first official said.
Cryptocurrency platforms must register with the FIU-IND, which is housed under the Revenue Department of the Ministry of Finance, in order to operate in India. The unit also investigates crimes such as money laundering.
Nearly a month after conducting a preliminary investigation into a security breach that led to a $230 million loss at WazirX, the troubled cryptocurrency exchange on Monday claimed that an independent forensic analysis found no compromise in its IT systems and blamed its wallet service provider, Liminal Custody, for the cyberattack. WazirX said the investigation was conducted by cybersecurity firm Mandiant Solutions, a subsidiary of tech giant Google.
“While a detailed report will be published soon, the findings largely indicate that the issue that led to the cyberattack originated with Liminal. The wallet that was attacked was managed using Liminal’s digital asset wallet and custody infrastructure,” WazirX said in a press release.
First published: August 22, 2024 | 18:39 IS
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