India Synchronizes Crypto Security Measures with Banking Sector to Tackle Rising Digital Crime
India has introduced a requirement for cryptocurrency businesses to undergo cybersecurity assessments as directed by the Financial Intelligence Unit (FIU-IND). This initiative is designed to bolster security measures and respond to the increasing risks of cyberattacks in the virtual digital asset (VDA) industry. Under this mandate, all crypto exchanges, custodial services, and intermediaries must be audited by professionals certified through the Indian Computer Emergency Response Team (CERT-In), which operates under the Ministry of Electronics and Information Technology as the primary cybersecurity authority. This move is part of a larger governmental effort to regulate crypto firms with the same standards and compliance expectations as conventional financial organizations.
This policy arrives at a pivotal moment, as recent data shows that cyber offenses connected to cryptocurrencies now account for about 20-25 percent of India’s total cybercrime cases. Offenders commonly use darknet platforms, privacy-focused cryptocurrencies, and coin-mixing tools to disguise illicit funds, complicating law enforcement efforts. The audits are set to unify and elevate security standards across the industry, requiring robust measures for safeguarding customer assets, protecting user information, and blocking unauthorized intrusions. The initiative has received strong support from industry leaders, who stress that high security standards are crucial for building confidence in a sector grounded in decentralization and digital openness.
The Prevention of Money Laundering Act (PMLA) has been extended to cover VDA service providers, putting them on an equal regulatory footing with banks and
Nonetheless, experts in the field have noted several obstacles in putting these audit requirements into practice. While they agree on the importance of the audits, they point out that the unique nature of the industry necessitates specialized advice and skills. Furthermore, the shift from the former Fit & Proper certificate to the Partner Accreditation for Compliance & Trust (PACT) certification has led compliance reviews to focus more narrowly on operational matters. This adjustment has prompted requests for further clarification and more detailed guidance on how to implement the requirements.
India’s regulatory approach to crypto continues to develop, with lawmakers also contemplating broader policy changes such as the Cryptocurrency and Regulation of Official Digital Currency Bill. The initial version of this bill proposed a total ban on private cryptocurrency businesses, but current indications suggest a move towards comprehensive oversight rather than outright prohibition. These changes signal the government’s increasing acceptance of the crypto industry as an integral part of the nation’s financial system.
The consequences of these audits are expected to be varied. For smaller and mid-tier crypto companies, compliance may mean higher operational expenses and could drive industry consolidation. Conversely, these steps may boost the confidence of investors and attract greater institutional participation by showcasing alignment with international regulatory standards. As India continues to refine its crypto regulations, the effectiveness of these reforms will hinge on clear implementation and the adaptability of platforms to new security and compliance demands.
