Indian Govt. Responds to Crypto Queries in Lok Sabha

Indian Minister of State for Finance Pankaj Chaudhary stated crypto assets by definition are borderless and require international collaboration to prevent regulatory arbitrage.
Indian Govt. Responds to Queries on Crypto Bill In Lok Sabha

The Indian government answered certain queries in the Lok Sabha, the lower house of parliament, on its cryptocurrency bill, virtual digital assets (VDA), and inquiries into cryptocurrency exchanges.

Parliament member Bhartruhari Mahtab queried Minister of State for Finance Pankaj Chaudhary about “the current status of the cryptocurrency bill” and “the timeframe within which the cryptocurrency bill would be tabled and subsequently be open for public inputs.

Chaudhary stated that currently, crypto assets are unregulated in India. He added that crypto assets by definition are borderless and require international collaboration to prevent regulatory arbitrage.

“Therefore, 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 of State for Finance added.

Mahtab also asked Chaudhary about which ministry and/or department would regulate cryptocurrencies and crypto tokens, and which would regulate other types of “virtual digital assets,” such as NFTs, dApps, real estate tokens, and other blockchain-based assets.

Chaudhary responded by stating that “Currently, policy related to crypto assets and related ecosystem is with the Ministry of Finance.”

A question arose on the number of registered/recognized crypto exchanges in the country to which Chaudhary responded that the Indian government does not register crypto exchanges.

The information on cryptocurrency exchanges that are the subject of government investigations for money laundering and tax evasion was the subject of yet another set of inquiries from parliament members.

Chaudhary answered stating the Directorate of Enforcement is looking into a number of cases involving cryptocurrency fraud, and several crypto exchanges have been discovered to be involved in money laundering. 

Reportedly, the Directorate of Enforcement has taken the necessary measures as per the Prevention of Money Laundering Act, 2002 (PMLA) requirements and as of 14.12.2022, these instances have resulted in the seizure of Rs. 907.48 crores in criminal proceeds, the arrest of three people, and the filing of four prosecution complaints before the Special Court, PMLA.

Additionally, under the Foreign Exchange Management Act of 1999 (FEMA), assets worth Rs. 289.68 crores have been seized under Section 37A of FEMA, and crypto exchange WazirX and its Director have been served with a Show Cause Notice for transactions involving crypto assets worth Rs. 2,790.74 crores.

The minister also stated that investigations into 12 crypto exchanges for dodging the Goods and Services Tax (GST). The total amount recovered to date, including interest and penalties, is 110.97 crore rupees. In addition, four investigations have been closed, while eight cases are still being investigated.

Also Read: India aims for Crypto SOPs during the G20 Presidency

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