The self-regulation comes at a time when India has yet to adopt regulations regarding cryptocurrencies or how to tax them.
Industry trackers say investigators including cybercrime officials, the Law Enforcement Branch and the Income Tax Department have been raising red flags in recent months.
In addition, major crypto exchanges receive requests from foreign investigators regarding some suspicious accounts.
For example, WazirX, one of the country’s largest cryptocurrency exchanges, recently reported the numbers in what it calls a “transparency report.”
Between April and September of this year, the exchange received 377 requests from law enforcement agencies, including 38 requests from foreign law enforcement agencies.
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The crypto exchange has locked out around 1,500 accounts.
In total, the exchange locked 14,469 accounts, although most of them were locked after customers asked them to stop services or there were other payment issues.
“Initiatives such as the Transparency Report add credibility to the ecosystem and make the crypto world more attractive to outsiders,” Nischal Shetty, CEO and Founder of WazirX. “We aim to look at the most important objectives, such as positive regulations, and we believe that we are leading the way through innovative approaches. ”
Many regulators in India had raised red flags around certain cryptocurrency transactions.
The exchanges said they had also developed a strong internal anti-money laundering policy.
“In India, we bring our four years of strong policy with our technologies to ensure we create products and services that aid crypto adoption while minimizing the risk of money laundering,” said Kumar Gaurav, founder and CEO of Cashaa.
The exchanges awakening to money laundering and other regulators also come at a time when India is considering proposing cryptocurrency regulations.
There has always been regulatory skepticism regarding cryptocurrency and its use for illegal activities ranging from buying drugs to money laundering.
Exchanges have always claimed that if the cryptocurrency is based on blockchain technology, all records are permanent and, in fact, it would be easier to discover the exact nature of the transactions.
“The report and think tank are part of our efforts to bring more clarity and increase transparency for our users and policymakers in India around all things crypto,” said Aritra Sarkhel, Director of Public Policy at WazirX.
Most of the major exchanges have seen between 100% and 400% an increase in their volumes and value of trading happening on their platforms amid the global rally and some hope on the domestic regulatory front.