To check illegal activities, Home Ministry developing tool to monitor and analyse crypto-currency transactions on Internet

Vijay Mohan

Chandigarh, September 20

With the growing use of crypto-currency and increased risk of it being used in illegal activities over the internet, the Ministry of Home Affairs (MHA) has formulated the requirement for developing a Cryptocurrency Intelligence and Analysis Tool (CIAT).

The project is being executed by the Indian Cyber Crime Coordination Centre, an establishment under the MHA that began functioning in 2020 to deal with training, research, forensics and investigation pertaining to cyber-crime.

According to sources, at present there is no indigenous tool available with law enforcement and regulatory agencies to monitor and maintain a database of addresses associated with illegal activities over the dark-net.

Sources said that the requirement is for a powerful, multi-functional tool that can scan the dark net on a regular basis, identify and monitor addresses being used for transactions and compile a complete record of the payments including address, time, date, exchange used and the form of service.

CIAT will also have the feature of triggering an alert when transactions are performed in certain accounts or if some accounts show unusual activities or high volumes, sources added.

A database of all known crypto exchanges worldwide, including their contact address would also be created, which would be used by the authorities to communicate with them as and when required during investigations.

Crypto-currency is defined as a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority such as the government or a bank.

Crypto-currency does not exist in physical form like paper money and is typically not issued by a statutory or legal authority. It is used outside banking and governmental institutions and are exchanged over the Internet, thereby bringing with it increased risks of being used in illegal or criminal activities, money laundering and tax evasion.

The first crypto-currency was released in 2009. According to reports, as of June 2023, there were more than 25,000 crypto-currencies available on the Internet, out of which over 40 had a market capitalisation exceeding one billion US dollars.

Laws relating to the use of crypto-currency vary from country to country and over recent years, there have been calls worldwide for increasing regulatory and supervisory measures on such transactions. Several global bodies and financial institutions have put forth recommendations in this regard.

In India, the central government drafted a Bill on regulation of crypto-currency in 2021, but it is yet to be presented in Parliament. In March, the Minister of State Finance, Pankaj Chaudhary had stated in Parliament that any legislation on the subject can be effective only with significant international collaboration.

While at present there are no laws in India on settling disputes arising from crypto-currency transactions, investors are required to report their profits and losses and pay a30 percent tax on earnings.