India has the potential to facilitate efficient cross-border payments using Central Bank Digital Currency according to the Reserve Bank of India governor Shaktikanta Das.

According to a local report, during his keynote address at the conference on Central Banking at Crossroads, Das reaffirmed his support for CBDCs to improve international money transfers, as a part of ongoing efforts to cut the time and cost of overseas remittances.

Das highlighted that India is one of the few large economies operating a 24×7 real-time gross settlement system, adding that expanding the RTGS system to settle trades in global currencies such as the US Dollar, Euro, and British Pound is currently under review. 

This, according to Das, could be achieved through bilateral or multilateral arrangements to simplify global transactions, with CBDCs potentially integrated into this expansion.

He added that India’s CBDC pilot programs are currently testing programmability and interoperability with existing infrastructures like the Unified Payments Interface, a platform that facilitates near-instant settlements between banks.

Additionally, the pilot program is working to develop offline solutions for “remote areas and underserved communities,” according to the RBI governor. 

The RBI initially announced these features in September 2023, noting that it was collaborating with major financial institutions to introduce them as part of efforts to popularize CBDC.

Das also reiterated his skepticism around cryptocurrencies, pointing to the uncertain landscape they create. According to him, CBDCs offer a controlled and stable digital currency, in contrast to the volatility of cryptocurrencies like Bitcoin and Ethereum. 

The governor acknowledged the challenges related to developing a universal CBDC framework and called for the creation of a standardized and interoperable CBDC framework, that would allow nations to build their own systems that fit into a global network.

India launched its CBDC pilot for the digital rupee in December 2022, covering both retail and wholesale segments. However, adoption has been slow, with the digital rupee reaching 1 million retail transactions by late June 2023 only after local banks introduced incentives and partially paid salaries in digital currency to drive usage, raising doubts about actual user adoption moving forward.

As of the latest update, the CBDC platform surpassed 5 million users in August, with Das advocating for a phased rollout, stressing the importance of understanding its impact on users, monetary policy, and the broader financial system.

Meanwhile, the RBI has remained firm in its opposition to cryptocurrencies, pointing to the potential risks they pose to the country’s economic stability. Back in 2022, Das expressed concerns about the lack of intrinsic value in cryptocurrencies.

Indians are being lured with fake job offers promising high salaries, only to be trapped in Southeast Asia’s cyber slavery and cryptocurrency fraud rings.

According to reports from local media, tens of thousands of Indian nationals are trapped as cyber slaves in Southeast Asia, where they are coerced into participating in online scams, including cryptocurrency fraud, phishing scams, and pig butchering scams, often targeting individuals back in India.

In some cases, the victims are also forced to impersonate law enforcement officials to extort funds from unsuspecting Indians via drugs-in-parcel scams.

Around 45% of cyber crimes targeting Indians are estimated to originate from Southeast Asia, the report added.

Government intervention and rescue efforts

The victims, mostly young Indians, are lured by fake job postings offering attractive salaries for IT and data entry positions. Upon arrival in countries like Cambodia, Laos, and Myanmar, their passports are confiscated, and they are taken to guarded compounds where they work under inhumane circumstances.

A March report claimed that Indians had lost at least inr 500 crores (roughly $60 million) to these operations between October 2023 and March 2024.

The severity of the issue has prompted the Indian government to initiate rescue efforts by collaborating with international organizations, NGOs, and local authorities in Southeast Asia to repatriate trapped citizens and dismantle the cyber slavery networks.

As reported by crypto.news, on Aug. 14 Indian youths were rescued from scam centers operating in the Bokeo province of Laos. At the time, the Indian Embassy in Laos cautioned that employment on a ‘Visa on Arrival’ basis is illegal and urged residents to verify the credentials of recruiting agents before accepting job offers in Laos.

Nevertheless, government records show that nearly 30,000 Indians who traveled to Southeast Asian countries such as Cambodia, Thailand, Myanmar, and Vietnam between January 2022 to May 2024 have not returned.

Among other initiatives by the Indian government, an inter-ministerial panel, including representatives from various government departments, is working to crack down on cyber slavery networks and ensure the safe return of trapped Indians. 

Meanwhile, telecom operators in the nation have been ordered to block international spoofed calls, monitor suspicious roaming activity in Southeast Asia, and disconnect millions of allegedly compromised sim cards linked to the scams.

Beyond crypto scams

Past investigations reveal that these crypto-related cyber scam networks often extend beyond financial fraud, with potential links to global human trafficking and exploitation rings.

In 2023, Bloomberg journalist Zeke Faux uncovered what initially appeared to be a scam involving the stablecoin Tether but led to the discovery of a massive human trafficking operation in Cambodia tied to Chinese criminal networks. Victims were held in compounds like “Chinatown” in Sihanoukville, subject to brutal conditions, physical abuse, and forced drug use to keep them compliant.

The severity of such cases has drawn the attention of international authorities, including the U.S. Department of the Treasury, which recently sanctioned a Cambodian senator with links to cyber-scam centers.

The sanctions targeted not only the senator but also his conglomerate and associated entities, all of which were involved in exploiting trafficked workers for crypto-related fraud.

Indian police are investigating the “Datameer” crypto trading app, which allegedly duped at least 700 locals out of inr 10 million.

According to a local report, the scheme promised returns of up to 50% to unsuspecting investors who were told their funds were being invested in cryptocurrencies.

Once the investors transferred their money through the fake app, the app shut down, and the scammers disappeared. During the time it was active, the scam managed to dupe investors of more than inr 10 million (roughly $119,000).

India has witnessed a spike in crypto demand despite a lack of solid crypto regulations, and a punishing taxation regime, with the nation managing to claim the top spot in Chainalysis’ 2024 Global Crypto Adoption Index. However, this growing appetite for cryptocurrencies has opened doors for scammers who are exploiting the hype.

The Datameer app, which reportedly surfaced in April 2024 and was active for five months, managed to draw in both small and large investments, Superintendent of Police and Cyber Wing head, Pankaj Kumar Rasgania, noted.

“The scammers lured gullible individuals through social media, encouraging them to invest in a scheme with promises of huge returns in a short period of time,” he added.

Preliminary investigations suggest that the perpetrators behind the app are spread across the country, with some evidence pointing to connections in Hong Kong. Authorities are currently coordinating with cyber wing experts from police forces nationwide, and more information will be disclosed as the investigation progresses.

Scams such as these have raised concerns due to their potential international links, particularly to regions in China. Similar connections have previously surfaced in other cases investigated by Indian authorities.

Back in March, the Enforcement Directorate (ED) filed a charge sheet against 299 entities, including individuals of Chinese origin, under anti-money laundering laws. These entities were tied to a mobile app called “HPZ Token,” which allegedly duped investors with promises of high returns from cryptocurrency mining.

In another case, crypto scammers tricked a doctor in India into transferring over $35,000 in a drugs-in-parcel scam. Authorities found that the stolen funds were funneled through multiple bank accounts, swapped for cryptocurrencies, and transferred to accounts in China and Taiwan.

India’s Financial Intelligence Unit is looking to recoup at least $345 million in goods and services tax from 7 seven foreign cryptocurrency exchanges that operated in the nation.

Sources familiar with the matter told the Economic Times that India’s anti-money laundering body is ready to hear the petitions of the exchanges—Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp—which were barred from offering their services following show-cause notices sent by the regulator.

The hearing will be held sometime this week where these companies will present their cases for resuming operations in India by demonstrating their willingness to comply with India’s Prevention of Money Laundering Act as a reporting entity.

Compliance challenges and GST liabilities loom large

As a reporting entity these exchanges are required to conduct strict customer due diligence processes and report suspicious activity, but just adhering to these requirements won’t be enough to secure a re-entry into one of the world’s fastest-growing crypto economies, which ranked first in Chainalysis’ 2024 Global Crypto Adoption Index, showing increased usage of centralized exchanges. 

The source added that exchanges will also be required to pay a fine, the amount of which will be determined based on their submissions to the regulator. Further, the regulator expects to collect approximately inr 2,900 crores (roughly $345.09 million) in GST from the seven trading platforms. 

The GST is a comprehensive indirect tax imposed on the production, sale, and consumption of goods and services across India. Any foreign entity operating within India’s borders is required to register under the GST framework and pay the applicable tax when offering services to Indian customers.

The FIU calculates the outstanding liabilities based on the transaction fees these platforms collected from Indian customers before the December ban, as seen in the case of Binance which was asked to clear $86 million in pending GST after it completed registration and paid a $2.25 million fine to resume operations.

Additionally, according to the source, the GST authorities are considering issuing notices to other foreign cryptocurrency exchanges that have operated within India, ensuring all entities meet their tax obligations and align with India’s regulatory standards.

However, the source indicated that it could still “take a while” before the exchanges are allowed to resume operations, even if they agree to meet all regulatory demands, clear penalties, and align with stringent compliance measures. Based on a previous report from crypto.news, this process could extend until March 2025.