Indian Government Updates Parliament on Crypto Related Matters

The Indian government on Monday provided Parliament with clarity regarding its cryptocurrency bill as well as the status of investigations into crypto exchanges.

The government of India has provided information to various members of Lok Sabha, the lower house of India’s parliament, on its plans to regulate cryptocurrencies as well as investigations into crypto exchanges, according to reports by Bitcoin.com.

Government Provides Updates on its Crypto Bill and Regulatory Plans

Parliament member Bhartruhari Mahtab asked the Minister of Finance to indicate “the current status of the cryptocurrency bill, which was due for being tabled during the winter session, 2021, of the Parliament” and the expected timeframe within which the crypto bill would be tabled and be open to public input.

Without providing a specific timeframe, Pankaj Chaudhary, minister of state in the Ministry of Finance, replied:

Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.

The Finance Minister was asked to state which ministry and/or department would be responsible for regulating cryptocurrencies and tokens. Chaudhary was also asked which department would regulate other forms of “virtual digital assets,” including NFTs, decentralised applications (dApps), real estate tokens, and other blockchain-based assets, to which he responded:

Currently, policy related to crypto assets and related ecosystem is with the Ministry of Finance.

Details Regarding Crypto Exchanges Under Investigation Also Sought

Members of parliament also requested “the details of crypto exchanges which are under investigation by the government for money laundering and tax evasion cases.”

Minister Chaudhary explained to Parliament that India’s Enforcement Directorate (ED) is currently investigating numerous cases related to cryptocurrency fraud in which some exchanges have also been found to be involved in money laundering. He explained that as of December 14:

Proceeds of crime amounting to Rs. 907.48 crores have been attached/seized, three persons have been arrested and four Prosecution Complaints have been filed before the Special Court, PMLA, in these cases.

It was also revealed that under the Foreign Exchange Management Act 1999 (FEMA), assets to the value of $35,046,152 have been seized to date. Chaudhary added that 12 crypto exchanges have been investigated for evading Goods and Services Tax. A further investigation is also ongoing that involves eight cases, and an additional four cases have been closed on payment in which interest and penalties were levied.

India’s Stance on Cryptocurrencies

Minister Chaudhary also made it clear:

Currently, crypto assets are unregulated in India. The government does not register crypto exchanges.

Although cryptocurrencies are extremely popular in the country, India’s Reserve Bank (RBI) is seeking a total ban on cryptocurrencies. The country has been vocal on its stance regarding crypto assets and maintains that they should be prohibited given their potential to threaten the country’s financial stability. The industry has been stifled since a 30% capital gains tax was imposed by union finance minister Nirmala Sitharaman in March. Under this tax structure, citizens trading in crypto is to pay a capital gains tax of 30% on their cryptocurrencies. Additionally, they will have to pay a 1% tax deducted at source on every transaction. India and its Reserve Bank may be against cryptocurrencies as such but have embraced the blockchain technology that underlies it by launching a digital rupee pilot.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.