Lok Sabha Question No. 1938 (UNSTARRED), answered on 2022-12-19
Subject: Crypto Currency and Virtual Digital Assets
Ministry: FINANCE
Asked by: Umesh G. Jadhav, Sanganna Amarappa Karadi, L.S. Tejasvi Surya, Jaisiddeshwar Shivacharya Mahaswamiji

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO. 1938 TO BE ANSWERED ON 19.12.2022

## Crypto Currency and Virtual Digital Assets

1938. DR. UMESH G. JADHAV: SHRI SANGANNA AMARAPPA: SHRI L.S. TEJASVI SURYA: SHRI SHA.BRA.DR.JAI SIDDESHWAR SHIVACHARYA MAHASWAMIJI:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government proposes to regulate or restrict the Virtual Digital Assets (VDA) in the country and if so, the details thereof;

(b) the salient features of regulation, if any, laid down by the Government for crypto currency and VDAs;

- (c)  whether  the  Government  plans  to  forge  international  cooperation  for  regulating  crypto currencies and VDAs and if so, the details thereof;
- (d) the estimated size of the crypto currency market in the country along with the number of registered/recognised crypto exchanges in the country; and

(e)  the  details  of  crypto  exchanges  which  are  under  investigation  by  the  Government  for money laundering and tax evasion cases?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (d): Currently,  crpyto  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.

(e): The Directorate of Enforcement is investigating several cases related to Crypto frauds wherein  a  few  crypto  exchanges  have  also  been  found  involved  in  money  laundering. Necessary action as per provisions of Prevention of Money Laundering Act, 2002 (PMLA) has  been  taken  by  the  Directorate  of  Enforcement.  As  on  14.12.2022,  proceeds  of  crime amounting to Rs. 907.48 crores have been attached/seized, 03 persons have been arrested and 04 Prosecution Complaints have been filed before the Special Court, PMLA, in these cases.

Further, under Foreign Exchange management Act, 1999 (FEMA), assets amounting to Rs. 289.68 crores have been seized under section 37A of FEMA and 01 Show Cause Notice to 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 has also been issued.

Few  cases  of  evasion  of  Goods  and  Services  Tax  (GST)  by  crypto  exchanges  have  been detected by Central GST formations as given below:

|   No. of Crypto Exchange Investigated |   Quantum of evasion detected (In Cr.) | Recovery (In Cr.)                    | Status                                                                                                               |
|---------------------------------------|----------------------------------------|--------------------------------------|----------------------------------------------------------------------------------------------------------------------|
|                                    12 |                                   87.6 | 110.97 (Including interest &penalty) | Further investigation under process in 8 cases and 4 cases closed on payment of tax along with interest and penalty. |

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