The Indian government has answered questions from parliament about the potential legalization of cryptocurrency and the steps it has taken to deter crypto-related fraud. “Crypto assets are currently unregulated in India. Frauds relating to crypto are dealt with under extant laws against fraud and cybercrime,” the Minister of State for the Ministry of Finance revealed.
Indian Ministry of Finance on Cryptocurrency Regulation
The Indian government responded to crypto-related questions in Lok Sabha, the lower house of India’s parliament, on Monday.
The first set of questions asked the Minister of Finance “whether the government is planning to legalize cryptocurrency in the country” and what “effect cryptocurrency will have on the common people and especially youth.”
Shri Pankaj Chaudhary, Minister of State in the Ministry of Finance, repeated his previous answer to Parliament. “Crypto assets are currently unregulated in India. Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage,” he said, further explaining:
Any legislation for regulation or for banning can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.
The minister also mentioned that India’s central bank, the Reserve Bank of India (RBI), “has been cautioning users, holders and traders of virtual currencies (VCs) that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks.”
While the Indian government is still working on a cryptocurrency bill, crypto income is already taxed at 30% in India and a 1% tax deducted at source (TDS) is levied on crypto transactions. Last month, the government brought crypto transactions under the Prevention of Money Laundering Act, 2002 (PMLA).
Crypto Fraud Prevention
The finance minister was asked in Lok Sabha about whether crypto-related frauds have increased in the last few years, what steps the government has taken to prevent such frauds, and whether all crypto exchanges operating in the country are in compliance with international financial regulations.
“Crypto assets are currently unregulated in India. Frauds relating to crypto are dealt with under extant laws against fraud and cybercrime,” Minister Chaudhary replied, noting that states and Union Territories (UTs) are responsible for investigating and prosecuting such crimes. He further noted that India’s Ministry of Home Affairs has launched a portal for reporting crypto-related frauds to the Cyber & Information Security Division.
“The Enforcement Directorate [ED] is investigating several cases under the provisions of Prevention of Money Laundering Act, 2002 (PMLA) and Foreign Exchange Management Act, 1999 (FEMA), related to crypto assets,” he continued, adding:
As on date, proceeds of crime amounting to Rs. 953.70 crores [$116.40 million] have been attached/seized/freezed, 5 persons have been arrested and 6 prosecution complaints (PCs) including 1 supplementary PC have been filed before the Special Court, PMLA in these cases.
“Further, under Foreign Exchange Management Act, 1999 (FEMA) assets amounting to Rs. 289.28 crores have been seized under section 37A of FEMA and 1 Show Cause Notice to crypto asset exchange Zanmai Labs Private Limited known as Wazirx and its directors under FEMA for transactions involving crypto assets worth Rs. 2,790.74 crores have also been issued,” the minister detailed.
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