FameEX Hot Topics | India's Government Addresses Inquiries on Crypto Legalization and Combatting Fraud

The Indian government has responded to two sets of questions related to cryptocurrency in the Lok Sabha, the lower house of India's parliament. The first set of questions asked the Minister of Finance whether the government plans to legalize cryptocurrency and what impact it will have on the common people and especially the youth. Shri Pankaj Chaudhary, the Minister of State in the Ministry of Finance, reiterated that crypto assets are currently unregulated in India and that any legislation for regulation or banning can only be effective with significant international collaboration on the evaluation of the risks and benefits.

The minister further stated that the Reserve Bank of India has been cautioning users, holders, and traders of virtual currencies that dealing in them is associated with potential risks, including economic, financial, operational, legal, customer protection, and security 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 is levied on crypto transactions. In addition, last month, the government brought crypto transactions under the Prevention of Money Laundering Act.

In response to the second set of questions, the finance minister was asked 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. The minister replied that crypto assets are currently unregulated in India, and frauds relating to crypto are dealt with under extant laws against fraud and cybercrime.

He further explained that India's Ministry of Home Affairs has launched a portal for reporting crypto-related frauds to the Cyber & Information Security Division, and the Enforcement Directorate is investigating several cases related to crypto assets. As on date, proceeds of crime amounting to Rs. 953.70 crores have been attached/seized/frozen, five persons have been arrested, and six prosecution complaints including one supplementary complaint have been filed before the Special Court, PMLA, in these cases. Further, under the Foreign Exchange Management Act, assets amounting to Rs. 289.28 crores have been seized, and one 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.

In conclusion, the Indian government is still working on regulating cryptocurrency and has cautioned users, holders, and traders of virtual currencies that dealing in them is associated with potential risks. The government has also taken steps to prevent crypto-related frauds and has attached/seized/frozen proceeds of crime in several cases related to crypto assets. Crypto assets are currently unregulated in India, and any regulation or banning will require significant international collaboration on the evaluation of the risks and benefits.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.