Earlier Government of India had declared that Bitcoin transactions cannot be considered as legal tenders. Indian Finance Minister, Arun Jaitley had expressed his views in the annual budget speech. Indian authorities are now gearing up to clamp down on the dramatic growth of the cryptocurrency economy. The government said that they intend to regulate cryptocurrency exchanges and not ban them altogether. This is to curb down the usage of cryptocurrency trading in illegal transactions and money laundering.
In an after-budget event, Subhash Chandra Garg said that the government will regulate cryptocurrencies in India. He is serving as a secretary in the department of economic affairs. According to Mr. Garg, by the end of the current financial year, the government will come up with proper regulatory rules on cryptocurrencies and exchanges. Unline normal year, the financial year in India ends on March 21. At the CNBC TV18-Mint event, Mr. Garg said that:
“We hope that within this year, the committee would finalize its recommendations and then it would require legal changes, regulatory assignments, but certainly there will be regulations by the end of this financial year.”
Mr. Garg is also heading a committee to study the impact of cryptocurrency on the mainstream economy. The committee will also make regulatory recommendations on the subject. Although, the Indian government did not set up this sole committee to study the feasibility of cryptocurrency regulation. Another committee already turned in its report on the same, but the government never made the details public.
Exchanges in India
Mr. Garg said that Exchanges will be the main target for regulating these transactions. He said that most of these exchanges are self-setup and self-regulated. And many people can use these exchanges illegal activities. Reaffirming the government’s stance, Mr. Garg said:
“The exchanges which have been set up currently are not regulated exchanges. They are in a way self-set up, self-regulated. There are no legal or statutory requirements for conducting the KYC (know your customer), there are no records of the transactions. When you move to a system of regulated exchanges for crypto assets, then you have a proper trial.”
Indian tax authorities are also monitoring Bitcoin transactions on suspicion of money laundering. Along with the enforcement directorate, the income tax department last month investigated multiple cryptocurrency users. An Income Tax official said that: “The income tax department sent notices to bitcoin users who were conducting transactions of more than INR 1 crore ($156,000) daily. These details are passed onto the Enforcement Directorate (ED), which is examining them for alleged money laundering and fraud.”