India’s Enforcement Directorate (ED) is currently investigating several cryptocurrency-related money-laundering cases and has already seized $115.5 million in connection with such crimes, according to the Ministry of Finance. This news comes as the latest development in a series of regulatory crackdowns aimed at the emerging cryptocurrency sector, which is already grappling with market volatility. In this blog post, we will explore the Indian government’s recent actions in the crypto space and discuss the implications for the future of digital assets in the country.
Enforcement Directorate’s Ongoing Investigations
The Indian crime-fighting agency has arrested five individuals involved in crimes facilitated by cryptocurrencies. Additionally, the ED previously issued a show-cause notice to local exchange WazirX and its directors for crypto transactions exceeding $338 million. These efforts showcase the authorities’ commitment to combating illegal activities within the digital asset ecosystem.
India’s Push for Crypto Regulations
Amid the ongoing crackdown, India is advancing regulations to enhance scrutiny of cryptocurrency companies’ activities. Though the Indian government has yet to establish comprehensive legislation governing digital assets, recent developments demonstrate its intent to regulate the sector more stringently. For instance, the Ministry of Finance announced last week that anti-money laundering rules would govern cryptocurrencies in the South Asian market.
New Regulatory Requirements for Crypto Firms
Under the updated regulations, cryptocurrency exchanges, NFT providers, and custody wallet operators must monitor suspicious financial activities. Crypto firms will also be required to perform know-your-customer (KYC) verifications. According to the Ministry of Finance, “Exchanges and wallet providers will be required to implement AML/CFT controls and be licensed or registered and supervised or monitored by national authorities.”
India’s G20 Presidency and Global Crypto Regulation
During its ongoing G20 presidency, India has stated its intention to prioritize the development of a global regulatory framework for unbacked crypto assets, stablecoins, and decentralized finance. This initiative highlights India’s commitment to addressing the challenges posed by digital assets on an international scale. During G-20, IMF Head had the opinion of “Banning of Cryptocurrency should still be on the table“
Suggested Reading on India’s stand on Crypto :
- Reserve Bank of India(RBI) Governor Mr.Das says Crypto must be banned and compares it to gambling
- India Requests IMF and FSB to Develop ‘Synthesis Paper’ on Crypto Assets during G20 meeting
- India’s Central Bank to Introduce Digital Currency as a Secure and Efficient Alternative, Says RBI Official
The Impact of Taxation on the Indian Crypto Market
Last year, the Indian government implemented a 30% tax on all crypto gains and a 1% deduction on each cryptocurrency transaction. This move, combined with market downturns, has significantly impacted local exchanges such as CoinSwitch Kuber, backed by Sequoia India and Andreessen Horowitz, and CoinDCX, backed by Pantera, reducing transaction volumes in the country.
The Indian Enforcement Directorate’s ongoing investigations and recent regulatory developments underscore the country’s efforts to curb illicit activities within the crypto sector and reinforce oversight. As the government advances its regulatory framework, the future of digital assets in India will likely be shaped by increasing scrutiny and compliance requirements. It remains to be seen how these actions will impact the overall growth and adoption of cryptocurrencies in the region.
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