The Indian Government Updates Parliament on the Cryptocurrency Bill and Crypto Exchange Investigations

The Indian government responded to two sets of questions about cryptocurrency and its regulation posed by members of the Lok Sabha, India’s lower house of parliament, on Monday.

Parliament member Bhartruhari Mahtab asked the finance minister to explain “the current status of the cryptocurrency bill, which was due to be tabled during the winter session of the Parliament in 2021,” as well as “the timeframe within which the cryptocurrency bill would be tabled and subsequently open for public inputs.”

Pankaj Chaudhary, minister of state in the Ministry of Finance, responded without elaborating:

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.

Mahtab also asked the finance minister to specify which ministry and/or department would regulate cryptocurrencies and crypto tokens, as well as which would regulate non-fungible tokens (NFTs), decentralised applications (dApps), real estate tokens, and other blockchain-based assets.

Chaudhary responded simply:

Currently, policy related to crypto assets and related ecosystem is with the Ministry of Finance.

Members of Parliament have also requested information on cryptocurrency exchanges under investigation

Several other parliament members have asked for “details of crypto exchanges that are being investigated by the government for money laundering and tax evasion cases.”

The Enforcement Directorate (ED), according to Chaudhary, “is investigating several cases related to crypto frauds, in which a few crypto exchanges have also been found involved in money laundering.” According to the minister, 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.

Furthermore, assets totaling Rs. 289.68 crores ($35,046,152) have been seized under the Foreign Exchange Management Act 1999 (FEMA). Furthermore, one Show Cause Notice has been issued under FEMA to Zanmai Labs, which operates the crypto exchange Wazirx, and its director for transactions involving crypto assets worth Rs. 2,790.74 crores.

According to the minister, 12 cryptocurrency exchanges have been investigated for evading Goods and Services Tax (GST). So far, 110.97 crore rupees have been recovered, including interest and penalties. In addition, eight cases are being investigated further, and four cases have been closed. He provided the following table to Lok Sabha:

Chaudhary also clarified:

Currently, crypto assets are unregulated in India. The government does not register crypto exchanges.

Nirmala Sitharaman, India’s finance minister, stated in October that the government intends to discuss crypto regulation with the G20 countries in order to establish “a technology-driven regulatory framework” for crypto. Last week, India’s economic affairs secretary, Ajay Seth, stated that the G20 nations hope to reach a policy consensus on crypto assets in order to improve global regulation. During the ninth India-US Economic and Financial Partnership meeting last month, US Treasury Secretary Janet Yellen and Sitharaman discussed crypto regulation.