India’s Latest Crackdown on Crypto: A Most Mysterious Mandate

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India, in a rather heroic effort reminiscent of my youthful attempts at maintaining my diary (clearly, those were the annals of a future scribe), is thrusting bank-grade compliance upon the unsuspecting crypto platforms. Mandating cybersecurity audits and stricter oversight, this move signals a dramatic, perhaps even melodramatic, regulatory upgrade across the burgeoning digital asset space.

Crypto Exchanges in India Now Face Bank-Level Compliance Obligations

In what can only be described as a delightful blend of bureaucratic rigor and governmental watchfulness, India has reportedly mandated cybersecurity audits for all cryptocurrency exchanges, custodians, and intermediaries. The Financial Intelligence Unit (FIU), in its infinite wisdom, directed that virtual digital asset (VDA) service providers must engage auditors employed by the Indian Computer Emergency Response Team (CERT-In), according to a quaint report from Economic Times on Sept. 17. Oh, CERT-In, the embattled guardian of the country’s cybersecurity infrastructure, who on this day, alongside the auditors, will witness VDA providers scrambled for compliance, much like myself at a prolonged family dinner. Thrillingly, the completion of these audits is now mandatory for FIU registration, thereby equating VDA service providers with banks under the illustrious Prevention of Money Laundering Act, 2002.

Harshal Bhuta, partner at P. R. Bhuta & Co., commented on the government’s titanic move. “The introduction of cybersecurity audits in all likelihood is triggered by recent crypto thefts,” he was rational enough to note. 🤓 Navigating this modern labyrinth, he further suggested, “Strict compliance with CERT-In’s longstanding directives…would aid investigative agencies in tracing funds as deftly as an offspring in the hands of their respective mother.”

The landscape of crypto-related crimes has ebbed, flowing with the current of India’s digital transgressions to now represent a staggering 20-25% of the country’s total offenses, as per local platform Giottus. Crooks often brandish the darknet’s shadowy embrace, utilizing the privacy-enhancing coins as deftly as a starving guest at a buffet. In an elegant twist of fate, the FIU now favors the “Partner Accreditation for Compliance & Trust” over the antediluvian “Fit & Proper” certificate, underscoring the urgent need for tightened compliance.

While the gray-haired jurists applaud this legislative dance as a commendable stride towards fortifying user safeguards, suspicions linger over whether auditors, seasoned veterans of the finance firmament, can truly reconcile themselves with crypto’s own eccentric vulnerabilities like private key security. Broader industry issues, such as high taxation and the tempest of regulatory uncertainty, continue their unabated storm.

Much like my grandparents’ overly cautious travels, India’s approach to cryptocurrency regulation has been marked by hesitance, resisting full legal embrace over fears of legitimizing assets as temperamental as a doting aunt at an in-law’s tea party. Crypto gains, saddled with a 30% tax and a 1% tax at source (TDS), face the scrutiny of the Income-Tax Bill 2025. Though a government document has shed light on ongoing regulatory uncertainty, officials warn us all that an outright ban would scarcely halt decentralized trading, and that oversight remains as elusive as a sense of humor in tax clauses. Intriguingly, the document also quivers at the prospect of U.S. stablecoin legislation, which could send ripple effects through global payments, challenging India’s own payment systems with destabilizing aplomb. 🎢

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2025-09-18 05:57