India has pitched for a global framework to regulate cryptocurrencies identifying their use in money laundering and terror financing as the biggest risks for all countries. Finance minister Nirmala Sitharaman raised the subject at a discussion on “Money at a Crossroad” hosted by the International Monetary Fund (IMF) in Washington DC.
Her suspicions are not groundless: Chainalysis’ report says that overall cybercriminals laundered $8.6 billion worth of cryptocurrency in 2021, which represents a 30% increase in money laundering activity over 2020. As indicated in the report, “while billions of dollars’ worth of cryptocurrency moves from illicit addresses every year, most of it ends up at a surprisingly small group of services, many of which appear purpose-built for money laundering based on their transaction histories.”
Sitharaman highlighted India’s performance in the digital world and the government’s efforts to build the digital infrastructure framework over the last decade, stressing the increase in digital adoption rate in India during the Covid-19 pandemic.
Cryptocurrencies like Bitcoin remain unregulated in India, although a surge in interest in such instruments in recent years has prompted the government to firm up a strategy to regulate them. The Indian government has recently introduced a 30% tax on Cryptocurrency to keep track of who was transacting in digital assets. However, un-hosted wallets create difficulty in keeping a trail following digital transactions.
Sitharaman also brought up the subject of the risks of untraceable transactions that might differ depending on the economy, she said during a panel discussion. The Finance Minister said that as long as the non-governmental activity of the crypto assets was through un-hosted wallets, regulation is going to be very difficult.
The minister added that no country could handle these alone and they can be only regulated when countries come together on board.