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FameEX Hot Topics | Indian Government Responds to Queries on Crypto Legalization and Anti-Fraud Measures

2023-04-06 16:40:00

The Indian government has addressed two sets of questions regarding cryptocurrency in the Lok Sabha, which is the lower house of India's parliament. The first set of questions sought information on whether the government plans to legalize cryptocurrency, and what impact such a move would have on the general public, particularly the youth. In response, Shri Pankaj Chaudhary, the Minister of State in the Ministry of Finance, explained that crypto assets are currently unregulated in India. He added that legislation for regulation or banning can only be effective with significant international collaboration on the evaluation of risks and benefits.

The minister also mentioned that the Reserve Bank of India has been warning users, holders, and traders of virtual currencies about the potential risks, including economic, financial, operational, legal, customer protection, and security risks. Although the government is working on a cryptocurrency bill, crypto income is already taxed at 30% in India, and a 1% tax deducted at source is applied to crypto transactions. Additionally, last month, the government brought crypto transactions under the Prevention of Money Laundering Act.

The second set of questions posed to the finance minister in Lok Sabha was related to crypto-related frauds. The minister was asked about the government's efforts to prevent such frauds, and whether all crypto exchanges in the country are compliant with international financial regulations. The minister replied that crypto assets are currently unregulated in India, and frauds relating to crypto are dealt with under existing laws against fraud and cybercrime. The minister further explained that India's Ministry of Home Affairs has launched a portal for reporting crypto-related frauds to the Cyber & Information Security Division. The Enforcement Directorate is also investigating several cases related to crypto assets, and proceeds of crime amounting to Rs. 953.70 crores have been seized or frozen, with five people arrested, and six prosecution complaints filed before the Special Court, PMLA. Under the Foreign Exchange Management Act, assets amounting to Rs. 289.28 crores have been seized, and a show-cause notice to the crypto asset exchange Zanmai Labs Private Limited, also known as Wazirx, and its directors under FEMA, has been issued for transactions involving crypto assets worth Rs. 2,790.74 crores.

In summary, the Indian government is still working on regulating cryptocurrency, and has cautioned users, holders, and traders of virtual currencies about the potential risks associated with them. The government has also taken steps to prevent crypto-related frauds, and has seized or frozen proceeds of crime in several cases related to crypto assets. However, given the borderless nature of crypto assets, any effective regulation or banning will require significant international collaboration to evaluate 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.

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