We must not let crypto be used against India as a Trojan Horse

We must monitor the cryptocurrency space closely to mitigate the security risks of digital tokens being weaponized sneakily

- G. N. BAJPAI & PRAVEEN TIWARI are, respectively, former chairman of Sebi and LIC, and former financial advisor, Caribbean Financial Action Task Force (CFATF).

The June 2025 report of the Financial Action Task Force (FATF) highlights a $1.46 billion theft by North Korea, one of the biggest heists in the history of crypto. Riding on the back of other major crypto scams, from Africrypt (South Africa 2012), One Coin (global 2014-17), Bitconnect (global 2016-18) and Plus Token Scam (China 2019) to FTX (US/Bahamas 2022), a new class of instruments has unmistakably arrived on the crime scene.

Cryptocurrencies made their debut in 2009 with the invention of Bitcoin. By design, a cryptocurrency uses blockchain technology for records and verification, with an unchangeable internet ledger that tracks transfers. These virtual assets have emerged as a unit of account, medium of exchange and store of value, and thus challenge the monopoly of fiat currencies.

Today, thousands of cryptocurrencies are floating around globally. The notable ones are Bitcoin, Ethereum, Altcoin, Utility and Governance tokens, apart from various stablecoins that are typically pegged to a fiat currency. Virtually anybody can write a program, set up a blockchain and create a cryptocurrency.

At the beginning, crypto use in India was limited to tech enthusiasts attracted by its decentralized governance that allowed borderless transactions and promised high returns. The proliferation of users over time led to regulatory unease. In April 2018, the Reserve Bank of India (RBI) prohibited banks from providing services to crypto exchanges and businesses on the grounds that such instruments raised the risk of money laundering and terror financing, while offering no consumer protection. In March 2020, the Supreme Court declared the ban unconstitutional, as the RBI failed to adduce credible evidence of actual harm caused by cryptocurrencies.