Indian Government Answers Questions on Bitcoin Transactions, Karnataka Scam, Legality of Crypto Trading – Regulation

The Indian government has answered three sets of questions in Parliament regarding Bitcoin transactions, the high-profile Bitcoin scam in Karnataka and the legality of cryptocurrency trading and exchanges in India. Meanwhile, the winter session of Parliament has begun and a crypto bill is expected to be passed during this session.

Indian government answers questions about Bitcoin transactions

On Monday, the Indian Finance Ministry answered three sets of questions about Bitcoin and cryptocurrency trading in Lok Sabha, the lower house of the Indian Parliament.

The first set of questions (asterisk number 12) titled “Bitcoin Transactions” asks Finance Minister Nirmala Sitharaman “whether the government is aware that Bitcoin transactions have been quietly flourishing in India in recent years.” The Finance Minister replied:

The government does not collect data on Bitcoin transactions.

Finance Minister Sitharaman was further asked “whether the government has any proposal to recognize Bitcoin as a currency in the country.” She simply replied, “No, sir.”

Questions about Bitcoin scam in Karnataka

The second set of questions (Unstarred Question No. 196) relates to the high-profile “Bitcoin Scam in Karnataka”, which recently received strong media coverage. The case was even raised by Karnataka Chief Minister Basavaraj Bommai during his meeting with Prime Minister Narendra Modi.

The Finance Minister was questioned about the fraud and the details of the investigation and the measures taken.

Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, responded: "Publicly available information suggests that a case of cybercrime related to Bitcoin has been investigated by the Karnataka Police...However, a case has also been registered by the Bangalore Zonal Unit of the Enforcement Directorate. Further disclosure of information in this matter is not in the larger public interest."

Questions about the legality of cryptocurrency trading and exchanges in India

The third set of questions (Unstarred Question No. 173) titled “Cryptocurrency” asks the Finance Minister “whether the government is aware of the cryptocurrencies traded in India”. Minister Chaudhary replied:

The government does not collect information about cryptocurrency trading.

The finance minister was also asked whether cryptocurrency trading is allowed in India and whether crypto exchanges are legal entities in the country. Additionally, she was asked to detail all the laws that apply to cryptocurrency and crypto exchanges.

Minister Chaudhary replied: "Cryptocurrencies are not regulated in India. RBI [the Reserve Bank of India], in its circular dated May 31, 2021, has advised its regulated entities to continue to conduct customer due diligence processes in accordance with Know Your Customer (KYC), Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT) standards and the obligations of regulated entities under the Prevention of Money Laundering Act (PMLA), 2002, in addition to ensuring compliance with relevant provisions of the Foreign Exchange Management Act (FEMA) for foreign remittances.”

Winter session of Parliament begins

The winter session of Parliament began on Monday. A cryptocurrency bill is listed to be included in this meeting. However, the bill is not on the agenda for Monday or Tuesday.

“The Cryptocurrency and Regulation of Official Digital Currency Bill 2021” aims to “prohibit all private cryptocurrencies in India but allows certain exceptions to promote the underlying technology of cryptocurrency and its use,” according to the legislative agenda for the winter session of Lok Sabha.

The bill also provides “a facilitating framework for the creation of the official digital currency issued by the Reserve Bank of India.” The RBI has previously said that it is working on a digital rupee that it is planning Start in phases.

The Indian government has not made public the contents of the crypto law, which has resulted in a lot of speculation about whether the government will ban cryptocurrencies like Bitcoin and Ether or create a regulatory framework for them.

What do you think of the Indian government's responses? Let us know in the comments section below.

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