A much-awaited consultation paper on cryptocurrency is expected to be released by September-October this year, according to a senior finance ministry official who requested anonymity. The consultation paper will seek to determine whether to ban cryptocurrency or legalise it.
“The consultation paper will gather inputs from various stakeholders, including the Department of Revenue and the Financial Intelligence Unit (FIU) of India, and global bodies. It is expected to be released by September-October,” said the 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 roadmap for crypto regulations. The paper offers insights into investor protection, cybersecurity, and anti-money laundering and counter-terrorism financing measures.
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. 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, information sharing, and addressing data gaps.
“We ask the IMF and FSB to provide regular and structured updates on the progress of implementing the G20 Roadmap on Crypto Assets. We support the ongoing work and global implementation of FATF (Financial Action Task Force) standards on crypto assets,” the communiqué said.
Earlier, Business Standard reported that the FIU-India received requests from four more offshore crypto exchanges to operate in India again. However, at the beginning of 2024, India had banned nine crypto exchanges—Binance, KuCoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfinex—for non-compliance with anti-laundering laws in the country.
“Apart from KuCoin and Binance, we have received four more requests from the 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.
A second senior finance ministry official mentioned that the government is closely monitoring crypto-related hacks and frauds in the country. This includes the $230 million loss suffered by WazirX due to a cyberattack on July 19, 2024.
“A team from FIU-India investigated the Mumbai office of WazirX in July 2024,” said the official familiar with the matter.
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 major challenges we face is the absence of any kind of regulations in the country. However, in the case of WazirX, we are continually in touch with them and requesting the necessary details,” said the first official.
Cryptocurrency platforms are required to register with FIU-IND, 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 a security breach that led to a loss of $230 million at WazirX, the embattled crypto exchange on Monday claimed that a separate forensic analysis found no compromise of its IT systems and blamed its wallet service provider, Liminal Custody, for the cyberattack. WazirX stated that the investigation was led by cybersecurity firm Mandiant Solutions, a subsidiary of tech giant Google.
“While a detailed report is forthcoming, the findings largely indicate that the issue leading to the cyberattack originated from Liminal. The wallet that was attacked was managed using Liminal’s digital asset custody and wallet infrastructure,” WazirX said in a press release.
First Published: Aug 22 2024 | 6:39 PM IST
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