As crypto has a high adoption rate and low transaction cost, India is working on developing a regulatory framework to prevent frauds and malicious attacks. As the Finance Minister recently stated, this framework will be put together based on the insights gathered from other G20 member nations, the International Monetary Fund, and World Bank. Top crypto exchanges are also taking robust measures to ensure a secure trading ecosystem.
The Indian government is taking the following measures:
Other Safety Mechanisms in Process
Strong KYC Infrastructures
While crypto offers greater anonymity than other payment options, it might be vulnerable to illegal activities. However, leading exchanges are taking KYC very seriously these days, and significant sums of money cannot be moved into crypto without detection. The Financial Action Task Force (FATF) is also ensuring that crypto companies have strong KYC infrastructures. Moreover, blockchain is one of the most effective tools for law enforcement bodies, unlike fiat currency, which is impossible to trace.
Anti-Money Laundering “Travel Rule”
To address increased concerns about money laundering in the crypto market, the FATF released Recommendation #16 or the Travel Rule. According to this rule, Virtual Assets Service Providers must provide relevant authorities with information on the sender’s and recipient’s names, geographic addresses, account numbers, etc.
Security Measures by Crypto Exchanges
The top crypto exchanges implement self-initiated checks, regular security audits, and have a zero-tolerance attitude towards malicious activities. They have appropriate KYC verification processes in compliance with RBI’s recommendations. Exchanges like WazirX routinely perform all essential Anti-Money Laundering (AML) checks. Through continuous transaction monitoring, wallet screening, and risk management, exchanges constantly improve platform compliance requirements and security. The best crypto exchanges also blacklist a user if fraudulent KYC or criminal activity is detected.
Safety Tips for Crypto Investors
While authorities have been taking the required action, it is essential for crypto investors to be vigilant. Like any other investment, crypto comes with both risks and benefits. Hence, being a little careful can go a long way. As an investor, tracking accounts regularly can help you detect any suspicious activity on time. Instead of storing all your money in a crypto exchange, you can use a cold or hardware wallet so that your information remains safe in case of a cyberattack.
Not sending cryptocurrency via email is another way to stay safe. If you receive emails from external links, it might help to check the domain name before clicking on any link or attachment. Researching and picking a reliable exchange is also a good idea. However, beware of trading groups that promise suspiciously high returns.
You can start with small transactions initially to make sure you are using a trusted exchange and get used to the process. It is also a good idea to understand the crypto market before investing in it. You can study popular currencies and explore their potential first. Also, talking about your investments on social media or using public Wi-Fi to access crypto accounts might not be a safe move.
There is no denying that money laundering and frauds have increased worldwide, and crypto being a still-new digital asset, is under scrutiny in this regard. However, the Indian government is taking measures like taxation and CBDCs to keep the environment safe for investors. Top crypto exchanges like WazirX are also implementing robust AML infrastructures, ensuring strict regulations, and working with legal authorities to improve transparency and traceability. To double up security, investors can follow the safety tips outlined in this article as well.
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