New Delhi: The Union finance ministry told Lok Sabha on Monday, December 19, that the Enforcement Directorate, as on December 14, had attached proceeds of crime worth Rs 907 crore and arrested three persons in cases related to money laundering by crypto exchanges.
Union minister of state for finance, Pankaj Chaudhary, added that four prosecution complaints were filed before the Special Court, Prevention of Money Laundering Act (PMLA), in the above cases.
Responding to queries from a group of MPs, the minister also revealed cases of evasion of Goods and Services Tax (GST) by crypto exchanges. He said 12 crypto exchanges were investigated while noting that the quantum of evasion detected was Rs 87.60 crore. The recovery, however, was to the tune of Rs 110.97 crore, including both interest and penalty, the minister informed the parliament.
The finance ministry further disclosed that further investigation was ongoing in eight cases while four cases were closed on payment of tax along with interest and penalty.
Chaudhary said under the Foreign Exchange Management Act, 1999 (FEMA), assets totaling Rs 289.68 crores had been seized under Section 37A of FEMA. He added that a show cause notice was also served on crypto exchange Zanmai Labs Pvt Ltd, known as WazirX, and its director under FEMA for transactions involving crypto assets worth Rs. 2,790.74 crore.
The disclosure of information by Chaudhary was in response to questions posed by MPs Umesh Jadhav, Sanganna Amarappa, Tejasvi Surya, Jai Siddeshwar and Shivacharya Mahawamiji on investigations under the provisions of PMLA initiated by the Enforcement Directorate into cases of crypto frauds.
As regards a proposed bill on cryptocurrency, which was initially expected in 2021, the minister said that since “crypto assets by definition are borderless and require international collaboration to prevent regulatory arbitrage”, therefore any legislation for banning them would only be effective with “significant international collaboration” on “common taxonomy and standards”.
As for a question on “whether the Government proposes to regulate or restrict the Virtual Digital Assets (VDA) in the country”, the minister responded by saying: “Currently, crypto assets are unregulated in India. The government does not register crypto exchanges.
Crypto assets by definition are borderless and require international collaboration to prevent regulatory arbitrage. Therefore, 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.”
To a separate question from Biju Janata Dal MP, Bhartruhari Mahtab, about the current status of the cryptocurrency bill, saying it was “due for being tabled during the Winter Session, 2021 of the Parliament” and “the timeframe within which the cryptocurrency bill would be tabled and subsequently be open for public inputs”, the minister repeated what he had told the other MPs in their question.
To another query from Mahtab on which ministry or department would regulate cryptocurrency and crypto token; and regulate various other virtual digital assets other than cryptocurrency such NFT, Decentralised Applications or dApps, real estate tokens and other blockchain-based assets, the minister stated that “currently, policy related to crypto assets and related ecosystem is with the Ministry of Finance”.