In the Lok Sabha, the lower house of the Indian Parliament, the Indian government gave some updates on its cryptocurrency law and investigations into crypto exchanges. “Crypto assets are by definition borderless and require international cooperation to prevent regulatory arbitrage,” said the Minister of State at the Ministry of Finance.
Indian government answers questions about crypto law and regulation
The Indian government on Monday answered two sets of questions about cryptocurrency and its regulation from different members of the Lok Sabha, the lower house of the Indian parliament.
Member of Parliament Bhartruhari Mahtab asked the finance minister to state “the current status of the cryptocurrency bill, which was supposed to be tabled during the winter session of parliament, 2021” and “the time frame in which the cryptocurrency bill will be tabled and later open to public contributions.”
Pankaj Chaudhary, Minister of State in the Ministry of Finance, responded without giving a specific time frame:
Crypto assets are by definition borderless and require international cooperation to prevent regulatory arbitrage. Therefore, any legislation on the subject can only be effective with significant international cooperation on risk-benefit assessment and the evolution of a common taxonomy and standards.
Mahtab further asked the finance minister to specify which ministry and/or department will regulate cryptocurrencies and crypto tokens, and which will regulate other types of “virtual digital assets”, such as non-fungible tokens (NFTs), decentralized applications (dApps), tokens for real estate and other blockchain-based assets.
Chaudhary simply replied:
Currently, the policy related to crypto assets and the related ecosystem is under the responsibility of the Ministry of Finance.
Members of Parliament are also seeking details on crypto exchanges under investigation
Another set of questions from several other members of parliament demanded “details about crypto exchanges that are under government investigation for money laundering and tax evasion cases.”
Chaudhary explained that the Enforcement Directorate (ED) is “investigating several cases related to crypto fraud where several crypto exchanges have also been found to be involved in money laundering.” The minister explained that as of December 14:
Proceeds of crime amounting to Rs. 907.48 crores have been seized/confiscated, three persons have been arrested and four prosecutions have been filed before the Special Court, PMLA, in these cases.
Further, under the Foreign Exchange Management Act, 1999 (FEMA), assets amounting to Rs. 289.68 crowns ($35,046,152) were confiscated. Additionally, a Show Cause Notice was also issued to Zanmai Labs, which operates crypto exchange Wazirx, and its director under FEMA for transactions involving crypto assets worth Rs. 2,790.74 crowns.
The minister added that 12 cryptocurrency exchanges have been investigated for goods and services tax (GST) evasion. So far, Rs 110.97 crore has been refunded, including interest and penalties. Moreover, eight cases are under further investigation and four cases have been closed. He gave the following table to the Lok Sabha:
Chaudhary also clarified:
Currently, crypto assets are not regulated in India. The government does not register crypto exchanges.
India’s finance minister, Nirmala Sitharaman, said in October that the government plans to discuss crypto regulation with G20 countries to establish a “technology-driven regulatory framework” for crypto. Ajay Seth, India’s economic affairs secretary, said last week that G20 countries aim to build a political consensus on crypto assets for better global regulation. Last month, US Treasury Secretary Janet Yellen and Sitharaman discussed crypto regulation during the ninth India-US Economic and Financial Partnership meeting.
What do you think about the Indian government’s approach to cryptocurrency? Let us know in the comments section below.
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