Indian Government Answers Questions About Crypto Legalization, Fraud Prevention

The Indian government has responded to parliamentary questions about the legalization of cryptocurrency and the steps it has taken to prevent crypto-related fraud. “Crypto assets are currently unregulated in India. Frauds relating to crypto are dealt with under extant laws against fraud and cybercrime,” the Minister of State for the Ministry of Finance told parliament.

Indian Ministry of Finance on Crypto Legalization

The Indian government answered two sets of crypto-related questions in Lok Sabha, the lower house of India’s parliament, on Monday.

The first set asks the Minister of Finance “whether the government is planning to legalize cryptocurrency in the country” and what “impact cryptocurrency will have on the common people and especially youth.”

Shri Pankaj Chaudhary, Minister of State in the Ministry of Finance, reiterated his previous reply to parliament. “Crypto assets are currently unregulated in India. Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage,” he said, elaborating:

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 also stated that India’s central bank, the Reserve Bank of India (RBI), “has been cautioning users, holders and traders of virtual currencies (VCs) that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related 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 (TDS) is levied on crypto transactions. Last month, the government brought crypto transactions under the Prevention of Money Laundering Act, 2002 (PMLA).

Crypto Fraud Prevention

The finance minister was asked in Lok Sabha 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.

“Crypto assets are currently unregulated in India. Frauds relating to crypto are dealt with under extant laws against fraud and cybercrime,” Minister Chaudhary replied, noting that states and Union Territories (UTs) are responsible for investigating and prosecuting…