India is working towards building a global database of cryptocurrency exchanges, including those on Dark Web, in an effort to combat challenges posed by cryptocurrency-related illicit activities.
This initiative is expected to help law enforcement agencies, including the Enforcement Directorate (ED), income tax department and the Central Bureau of Investigation (CBI) get crucial information on crypto assets and track their use in crime and money laundering activities.
The database is expected to be rolled out by the end of the current financial year, according to a report in the Economic Times.
In addition to these national implications, this move is being viewed as India's decisive step towards aligning with global strategies concerning cryptocurrency assets.
The Organisation for Economic Co-operation and Development (OECD) recently unveiled its Crypto-Asset Reporting Framework (CARF), aimed at reporting and taxation of crypto transactions on a worldwide scale.
Roshan Aslam, co-founder and CEO of Bitcoin Rewards company GoSats, said on the government's proactive approach: "The Indian government is crafting a foundational framework to prevent the misuse of cryptocurrencies and amplify the global anti-money laundering (AML) capabilities."
He added: "Malicious elements transfer cryptocurrencies across the globe through layers of the Web and the Dark Web to avoid detection. The lack of international cooperation and standardised regulations on this emerging technology makes it difficult to track these transfers. The government's efforts will pave the way for global collaboration, and create necessary safeguards to ensure that the crypto ecosystem can grow with good players."
India has taken steps to seek help from other nations in gathering more intelligence on these exchanges, and several nations have shared intelligence.
Cryptocurrency exchanges operating on the Dark Web have remained elusive, and they are mostly used for trafficking and terror financing.
The report added that the Ministry of Home Affairs is also taking a keen interest in the project, especially after reports surfaced of the use of crypto assets in the Manipur violence.
The ministry is already deeply engaged in the development of a sophisticated Cryptocurrency Intelligence and Analysis Tool (CIAT). CIAT will gather detailed transaction records, including addresses, timestamps, dates, exchange information, and service descriptions. It will also send alerts to authorities of any unusual or irregular cryptocurrency activity.
These monitoring mechanisms are crucial as India is currently crafting a crypto regulatory framework guided by International Monetary Fund (IMF) and the Financial Stability Board (FSB) recommendations, potentially leading to framing of new crypto laws in the coming months.
