The surge in Bitcoin Investments flowing in the country has made Indian Tax Department and other investigation agencies wary of the fact that it could have been possibly routed for other illicit activities like money laundering and tax evasion.
Earlier in July, Supreme Court had asked the Indian government and Reserve Bank of India to take notice of the sudden increase of Bitcoin investments and to see any possibility of money laundering and terror funding. The Indian Supreme Court has also formed a ‘Special Investigation Team’ on black money which has reported framed a draft suggesting ‘curbs’ in the trading. An
unnamed official said:
“There are concerns on the way it operates…Some unaccounted money could be flowing into these.”
India has witnessed a sudden surge in Bitcoin transactions in past one year especially after the
demonetization drive announced last year in November 2016. The demonetization drive was aimed
to unroot all the unaccounted black money flowing within the system and to move towards a more
transparent digital mode of transaction. This was the time when the country witnessed a sudden
surge in digital transactions overall and possibly a shift driven towards using other virtual
currencies like Bitcoin and other cryptocurrencies.
Indian Tax Department has been working with the country’s economic law enforcement and
intelligence agency -The Enforcement Directorate – for the screening of all the Bitcoin-related
Earlier this month, RBI executive director Sudarshan Sen said:
“As regards non-fiat cryptocurrencies, I think we are not comfortable.”
RBI has made its stand clear for the time- being that “Any user, holder, investor or trader dealing with virtual currencies is doing so at their own risk. They (virtual currencies) pose potential financial, legal, customer protection and security-related risks.”
However, India is yet to make a clear stand regarding how it wants to treat cryptocurrency transactions. Owing to the significant growth in popularity and adoption of cryptocurrency the Indian government is supposedly believed to be forming a ‘virtual currency committee’ in order to form a regulatory framework for the trading of the virtual currencies.
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