Cryptocurrency is being used by terrorists and cybercriminals, India's FIU finds

A trends study conducted by the federal financial intelligence unit of India has expressed "suspicion" that cryptocurrency is being used across the country's landscape in serious criminal acts like terrorist financing, fuelling secessionist activities, cybercrime, narcotics trafficking apart from illegal betting and gambling.

The Financial Intelligence Unit (FIU) of India has raised suspicions over the use of cryptocurrency in serious criminal acts across the country’s landscape.

The typologies report for the virtual digital assets (VDAs) and their service providers (crypto exchanges) was prepared by the FIU during the 2023-24 financial year after gathering a number of suspicious transaction reports (STRs) generated from this sector and conducting their "operational analysis".

The report, which was accessed by PTI, made it explicitly clear that these trends were based "only on suspicion" and involved financial and national security implications.

The FIU shared these trends as well as "credible" intelligence on the operations of cryptocurrency in the country with relevant law enforcement agencies like the ED, CBI and the Income-Tax Department and "necessary" enforcement action was taken by them in certain cases.

India is currently formulating a framework for regulating and monitoring cryptocurrencies, but until that is implemented, crypto is not yet illegal in the country.

The apex bank and the government wing have been advising the public about the risks involved in crypto transactions and to proceed with caution.

Income earned out of cryptocurrency transactions is taxed at a flat rate of 30 per cent since 2022.

The Reserve Bank of India (RBI) too has been sceptical about the use of private crypto assets and considers it a major threat to the macro-economic and financial stability of the country.

Earlier this year, the RBI Governor had said that the central bank is totally opposed to the use of private crypto assets in the country and it will continue to advise the government accordingly.