India Intensifies Crypto Oversight in Jammu & Kashmir

Key Takeaways

• India’s FIU has instructed the crypto exchanges to strictly monitor the crypto transactions in Jammu & Kashmir 
• The advisory from the Financial Intelligence Unit indicates close monitoring of the private wallets and privacy coins, which could be used for terror financing
• The birth of tokens with names similar to the terror attack and its response stumbles the intel agencies 

India’s Financial Intelligence Unit (FIU) has instructed the crypto exchanges to closely monitor the transactions, specifically those coming from Jammu & Kashmir and the other border regions. This comes in the wake of a report submitted by the FIU, which raised the possibility of money laundering in these areas, advising the crypto firms to remain alert. The order arrives amid the rising tensions between India and Pakistan. 

Source: Indian Navy

Importantly, the exchanges are instructed to scrutinize the private wallets and the private coins that are used to send money directly from one person to another without being noticed on the blockchain. 

“Crypto exchanges and applications are asked to closely monitor and report transactions involving ‘private wallets’, which let users manage digital coins, avoiding exchanges registered in India, bypassing KYC regulations,” confirmed a senior FIU official. 

Ever since the 2021 crypto bull run, the markets have not only attracted new participants but also the authorities across the globe. The Indian authorities imposed huge taxes on cryptos and imposed strict regulations on crypto exchanges. The exchanges are required to provide all the details about the investors, transactions, etc., and more. These measures were to curb the misuse of crypto in illegal activities like terror funding. 

Read more about Crypto Taxation in India.

India: Launch of PAHALGAM & SINDOOR Tokens Alert Agencies

Soon after the deadliest terror attack on tourists in Pahalgam and the Indian response in the form of ‘Operation Sindoor,’ the birth of tokens with similar names has raised some suspicion. The token named PAHALGAM has been launched on Solana and Avalanche, while the token SINDOOR went live on the Solana chain. 

Interestingly, the PAHALGAM token has just 2 holders with a market capitalization of around $4.21K, while SINDHOOR has 63 holders with a total supply of 1 billion. The SINDHOOR pool has been created a few hours before, which suggests more liquidity could probably flow in as 38 SOL was traded in the pool in the past 24 hours.

As a result, the exchanges are put on high alert to track the withdrawals from wallets to private wallets as well as deposits. The regular banking channels are usually avoided in making payments for terrorist activities, while cryptos are used to avoid detention. With digital assets yet to be regulated in India, close monitoring seems to be the need of the hour.