India to Create Global Database of Cryptocurrency Exchanges to Combat Crime
India is taking steps to establish a worldwide database of cryptocurrency exchanges, including those operating on the dark web. The purpose of this database is to provide essential information to law enforcement agencies such as the Enforcement Directorate (ED), income tax department, and the Central Bureau of Investigation (CBI) regarding crypto assets and their involvement in criminal activities and money laundering.
A senior official from the Financial Intelligence Unit stated that by the end of the fiscal year, India will have its comprehensive crypto exchange database accessible to enforcement agencies globally.
Aligning with Global Initiatives
This move by India aligns with the global efforts to closely monitor crypto asset transactions. The Organisation for Economic Co-operation and Development (OECD) introduced the Crypto-Asset Reporting Framework (CARF), which enables the annual automatic exchange of tax information on cryptocurrency transactions in a standardized manner.
The Ministry of Home Affairs (MHA) is also actively involved in this project due to reports indicating an increasing use of cryptocurrency in drug trafficking. The MHA is currently developing a Cryptocurrency Intelligence and Analysis Tool (CIAT) to aid in tracking these transactions.
Fighting Illicit Activity
The Financial Intelligence Unit has already identified illicit drug transactions facilitated by cryptocurrencies amounting to ₹28,000 crore between 2019 and 2021. With the establishment of the global database, it is expected that law enforcement agencies will have better access to information, enabling them to combat crime more effectively.
Hot Take: India Takes a Proactive Approach Towards Cryptocurrency Regulation
India’s initiative to create a global database of cryptocurrency exchanges demonstrates its commitment to combating crime and ensuring transparency in crypto transactions. By aligning with international efforts and developing its own tools, India aims to stay ahead of the curve in regulating and monitoring the use of cryptocurrencies. This proactive approach highlights the government’s recognition of the potential risks associated with crypto assets and its determination to address them effectively.
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