Cryptocurrency is gaining popularity in India and with a lack of KYC and AML policies, citizens and investors are facing many problems. Many have adopted for judicial recourse, for enforcement of their rights against fraudulent exchanges.
With the hype of cryptocurrencies, especially Bitcoin, reaching new skies of success. Indian investors are also beginning to show interest in the crypto trade world. However, due to the lack of regulations governing cryptocurrency, the citizens investing in cryptocurrency are facing or engaged in fraudulent exercises.
Although Indian people have been demanding for prudent system to have the cryptocurrency trade regulated for some time now. Yet, the demands have gained much force in the last year after the order of the Supreme Court of India. The SC quashed the ban on cryptocurrency, imposed by the Reserve Bank of India as being illegal and unconstitutional.
The Reserve Bank of India (RBI) through a circular declared the trade of cryptocurrency as illegal and imposed a ban on it. The circular was followed by explanations from the RBI that it was impossible to regulate cryptocurrency trades. RBI claimed that it was very possible that crypto could be used for illegal purposes. RBI also claimed that promoting the use of cryptocurrency would reduce the value of the Indian rupee and may destabilize it.
The Supreme Court denied these claims of RBI and said that regulating cryptocurrency trade was within its jurisdiction. SC further held that RBI has failed to show any damage caused because of cryptocurrency, to the institutions regulated by it.
That since the decision of the SC, trade of cryptocurrency has resumed in India freely. However, the KYC and AML for policies are still to be implemented on the exchanges doing trade of cryptocurrency.
Due to the lack of such policies, there are many who are using such a medium for means of illicit trading in India. While there are users who are using the medium for money laundering or other illegal purposes. There are some people running illegal exchanges with the intention to scamming people. There have been many cases reported of such scamming where the scammers took funds and issued a fake receipt of assets.
Police reports have been filed against those running such scam businesses. While, some of the citizens have taken their claims directly to court for recovery of their funds.
An international exchange working in India said that they are compelled to make own rules and guidelines to follow. These guidelines have been developed to safeguard the interest of users and of the exchange as well. CoinDCX, another exchange, said that they monitor almost every transaction for fraud or illegal practices. They further added that quite recently they have frozen four accounts that were suspicious of pump and dump scheme.
The citizens of India, desperately want of a piece of the crypto market. However, the trade practice is currently not secure, as long as RBI does not implement certain regulations on the crypto-exchanges.