Indian cryptocurrency exchanges start blocking accounts after government raises red flags

October 15, 2021

Indian cryptocurrency exchanges have started reporting and blocking trading accounts, which undertake suspicious trades after government agencies raised red flags over cryptocurrencies being used for money laundering.

The self-regulation comes at a time when India is yet to come out with any regulations around cryptocurrencies or the way to tax them.

Industry trackers say investigators including cybercrime officials, the Enforcement Directorate and the income tax department, had raised red flags in the past few months. For instance, WazirX, one of the largest cryptocurrency exchanges in the country, recently declared the numbers in what it calls a “transparency report”. Between April and September this year, the exchange got 377 requests from legal enforcement agencies, out of which 38 requests were from foreign law enforcement agencies. The crypto exchange locked about 1,500 accounts. In all, the exchange locked 14,469 accounts, although most of them were after customers asked them to stop services or there were some other payment issues.

Many regulators in India had raised red flags around certain cryptocurrency transactions. Exchanges have said they have developed a strong internal anti-money laundering policy as well.The exchanges waking up to money laundering and other regulators also come at a time when India is planning to come out with a cryptocurrency regulation.
There has always been regulatory scepticism around cryptocurrency and whether it can be used for illegal activities from buying drugs to money laundering.

Source: The Economic Times

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