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Crypto exchanges in India to start reporting suspicious transactions

Modi India
Modi India

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Government intelligent agencies are seeking a new law to list crypto exchanges under the existing crypto regulatory system distinctively. The new law will make it compulsory for the exchanges to share details of suspicious transactions with law enforcement agencies proactively. The goal is to reduce the use of crypto to carry out fraudulent and criminal transactions.

The situation was discussed at a conference held by the National Security Strategies, with Home Minister Amit Shah in attendance.

A senior government official stated that an investigation revealed that Chinese shell companies that operate digital loan apps in India used the crypto exchanges to withdraw funds from India. The official added that there is no record of the ownership of the cryptocurrency exchanges in India. The existing law allows the authorities to look into the exchanges only after a criminal case is registered.

Intel Agencies Seek More Authority

The official stated that the police and law enforcement agencies are authorized to seek information under Section 91 of the CrPC code. But on several occasions, the exchanges cannot seek vital details in cases where there is no First Information Report (FIR).

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The Intelligence Agency also talked about the challenges crypto exchanges are causing for proper implementation of the security rules. Most of them don’t have a physical office and the data storage is mainly cloud-based

As a result of these issues, the agency wants to get authority similar to that of the Prevention of Money Laundering Act (PMLA). This will enable the authorities to get more information from exchanges.

The official said the present situation is making it very difficult for the agency to work effectively. This is because no rule mandates the exchanges to report malicious transactions.

The Enforcement Directorate recently froze ₹65 crore worth of assets of WazirX exchange and ₹370 crore worth of assets of Flipvolt.

Last month, the Minister of Finance, Nirmala Sitharaman, stated that the Reserve Bank of India (RBI) is planning to ban cryptocurrencies. The agency said the country’s fiscal and monetary health will be in jeopardy if it continues to allow crypto operations.

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