India has been consistently progressing towards crypto regulation in the country, given the high rate of adoption by its citizens.
On Monday, The Indian government answered two sets of questions about cryptocurrency and its regulation in the session of Lok Sabha, the lower house of parliament.
A parliament member named Bhartruhari Mahtab asked the minister of finance to state, Pankaj Chaudhary, about “the current status of the cryptocurrency bill” to be implemented in the country and the “timeframe within which the bill would be laid for public inputs.” The bill was due on the list of topics to be discussed during the winter session of the 2021 parliament.
Chaudhary, in his reply to the politician’s questions, did not provide a specified timeframe; however, he said that regulation for crypto assets requires global collaboration to be efficient and effective.
“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.”
Further, Mahtab asked Chaudhary about the ministry’s plans to allocate the authority to overview cryptocurrencies and crypto tokens. He asked which department is going to regulate crypto assets and which would regulate other types of “virtual digital assets” like non-fungible tokens (NFTs), decentralized applications (dApps), real estate tokens, and other blockchain-based assets.
However, the minister didn’t give an extensive answer to the question and instead said that “currently, policy related to crypto assets and related ecosystems is with the Ministry of Finance.”
The minister had several other questions from other parliament members on the topic of crypto. Some requested the details of crypto exchanges that are under investigation by the government on the grounds of money laundering and tax evasion cases.
Chaudhary, in his reply, revealed that the Enforcement Directorate (ED), a multi-disciplinary organization mandated with the investigation of the offense of money laundering and violations of foreign exchange laws, is investigating several cases related to crypto fraud. In a lot of these cases, a few crypto exchanges have also been found involved in money laundering.
He added 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.” The PMLA stands for Prevention of Money Laundering Act, a criminal law of the Parliament of India passed by the NDA government in 2002 to prevent money laundering and confiscate property derived from the laundered money.
Additionally, under the Foreign Exchange Management Act (FEMA), assets equivalent to Rs. 289.68 crores ($35,046,152) have been seized.
Reportedly, a notice under FEMA has also been sent to Zanami LAbs, which operates under the crypto exchange Wazirx, and its director for transactions involving crypto assets worth Rs. 2,790.74 crores ($337,349,223).
Further, 12 crypto exchanges have been investigated for not adhering to Goods and Services Tax (GST), a single tax on the supply of goods and services, right from the manufacturer to the consumer. As of now, Rs. 110.97 crores ($13,300,507) have been confiscated, including interest and penalties.
Moreover, eight cases are under investigation, and four cases have been closed. A table presented in the parliament is as follows:
Chaudhary also acknowledged that “currently, crypto assets are unregulated in India; the government does not register crypto exchanges.”
India has discussed the severity of money laundering and terrorism financing via crypto earlier as well. In November, the finance minister, Nirmala Sitharaman, and the US Treasury Secretary discussed crypto in its ninth India-U.S. Economic and Financial Partnership meeting, as reported by Todayq News.
Earlier this year, the finance minister revealed that the government plans to seek help from other nations in developing its crypto regulation. Ajay Seth, India’s economic affairs secretary, said last week that the G20 nations aim to build a policy consensus on crypto assets for better global regulation.