The Government of India responds to a parliamentary question regarding measures taken to legalize cryptocurrencies and prevent crypto-related fraud.” Crypto assets are not currently regulated in India. Crypto-related scams will be dealt with under the existing laws against fraud and cybercrime,” the Minister of State for Finance said in Parliament.
Indian Finance Ministry’s Position on Crypto Legalization
The Indian government answered two sets of crypto-related questions in the Lok Sabha, the lower house of India’s parliament, on Monday.
The first set asked the finance minister “whether the government plans to legalize cryptocurrencies in the country” and “the impact of cryptocurrencies on the common man, especially the youth.”
Shri Pankaj Chaudhary, Minister of State for Finance, repeated his previous answer in Parliament.” Crypto assets are not currently regulated in India. Crypto assets are borderless by definition and require international cooperation to prevent regulatory arbitrage,” elaborating:
Laws for regulation and prohibition can only be effective with significant international cooperation on risk and benefit assessment and the development of common taxonomy and standards.
The minister also said that the Reserve Bank of India (RBI), India’s central bank, “has warned users, holders and traders that trading in virtual currencies (VCs) involves potential economic, financial, operational, legal, customer protection and security risks.”
The Indian government is still working on a cryptocurrency bill, but crypto income is already taxed at 30% in India and crypto transactions are subject to a 1% withholding tax (TDS). Last month, the government decided to bring crypto transactions under the Prevention of Money Laundering Act of 2002 (PMLA).
Prevention of Crypto Scams
The Finance Minister was asked in the Lok Sabha whether crypto-related scams have increased in the last few years, what steps the government is taking to prevent such scams, whether all crypto exchanges operating in the country are in compliance with international financial regulations and other questions such as.
“Crypto assets are not currently regulated in India,” Minister Chaudhary replied, “Crypto-related scams are dealt with under existing laws against fraud and cybercrime,” noting that states and Union Territories (UTs) are responsible for investigating and prosecuting such crimes. He further explained that the Indian Ministry of Home Affairs has launched a portal for reporting crypto-related scams to the Cyber&Information Security Division.
“The Enforcement Directorate (ED) is investigating several cases under the provisions of the Prevention of Money Laundering Act (PMLA), 2002 and the Foreign Exchange Management Act (FEMA), 1999, relating to crypto assets,” he further said:
Currently, Rs. 953.7 million ($116.4 million) in criminal proceeds have been seized, five persons have been arrested and six prosecution charges (PCs), including one supplementary PC, have been filed before the PMLA Special Court in these cases.
“Further, assets amounting to Rs. 289.28 crores were seized under Section 37A of the Foreign Exchange Management Act (FEMA), 1999, against crypto asset exchange Zanmai Labs Private Limited known as Wazirx and its directors under FEMA One Show Cause Notice was also issued in respect of transactions relating to crypto assets worth Rs. 2,790.74 crores,” the Minister noted.
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