India’s Modi Says Digital Currencies Are Being Used to Fund Terrorism

Digital currencies need more regulation to curb funding for terrorist operations, India’s Prime Minister Narendra Modi told a major international forum on countering extremist group funding on Friday.

India has struggled to rein in cryptocurrency transactions after years of phenomenal growth, helped by burgeoning local trading platforms and glittering celebrity endorsements.

Modi said last year that Bitcoin poses a risk to younger generations and could “spoil our youth” if it “falls into the wrong hands.”

On Friday, he went further, telling delegates at the Counter-Terrorism Financing Conference that “private currencies” posed a serious security risk.

“New types of technology are being used for terrorist financing and recruitment. Challenges are emerging from the dark web, private currencies and more,” Modi said.

“There needs to be a unified understanding of new financial technologies,” he added.

“A uniform understanding can result in a uniform system of checks and balances and regulation.”

Delegates from dozens of countries are attending the two-day conference in the capital New Delhi, which follows a special session of the UN Counter-Terrorism Committee held in India last month.

Cryptocurrencies have been scrutinized by Indian regulators since they first hit the local market nearly a decade ago, with a rise in fraudulent transactions leading to a central bank ban in 2018.

India’s Supreme Court lifted the restrictions two years later and the market grew rapidly, growing nearly 650 percent by June 2021 – second only to Vietnam, according to research by Chainalysis.

The government also proposed banning “all private cryptocurrencies” but ultimately withheld profits from “private currencies” and later taxed them at 30 percent.

Globally, the crypto market has been in turmoil with the collapse of FTX, a major exchange for digital transactions, this month.

Once valued at $32 billion, FTX filed for bankruptcy last week.

Its demise sent major cryptocurrencies plummeting, further eroding investor confidence in the fledgling and turbulent sector.

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