Indian Law Enforcement Agency Has Issued Notices for Crypto Exchanges
According to the Economic Times, the Enforcement Authority of India (ED) has issued notices to crypto exchanges asking them to provide additional information about alleged foreign exchange management violations by these organizations.
We are talking about possible violations of the Foreign Exchange Management Act of 1999 (FEMA), which sets out the formalities and procedures for all foreign exchange transactions in India. The main purpose of the law was to facilitate foreign trade and payments and to ensure the orderly development and maintenance of the Indian forex market. ED is tasked with enforcing the law and probing violations under FEMA and the Money Laundering Prevention Act of 2002 (PLMA).
"Transaction history, foreign currency relations, how much money is coming out of India - ED studies every detail of offshore transactions," an official told the ED Economic Times.
The renewed focus on FEMA's alleged violations comes amid the continued decline of the Indian Rupee (INR) against the US dollar. The INR fell to a record low of 89.40 per dollar on Tuesday, bringing the decline since the beginning of the year to 6%.
India's crypto ecosystem has seen explosive growth after the Supreme Court overturned the Reserve Bank of India's banking ban on crypto exchanges in March 2020. However, this boom has attracted the attention of various government agencies. Last year, ED issued a notice of staging for the Mumbai-based WazirX crypto exchange on transactions with cryptocurrencies worth 27.91 billion rupees (382 million US dollars).
Cryptocurrencies allow you to freely move money across political borders, bypassing traditional banking channels. An increase in outflow through a decentralized cryptosystem may put downward pressure on the national fiat currency. In addition, the system can be used for money laundering and terrorist financing, as noted by Indian Finance Minister Nirmala Sithara earlier this year.
Bangalore-based crypto exchange CoinSwitch Kuber has confirmed receipt of the ED notification:
"We receive requests from various government agencies. Our approach has always been transparent. The crypto sector is an early-stage industry with great potential, and we are constantly interacting with all stakeholders," he wrote.
According to Economic Times sources, the CoinDCX crypto exchange has also received a notification, and the platform's CEO Sumit Gupta is cooperating with the agency's investigators.
India's crypto ecosystem has seen explosive growth after the Supreme Court overturned the Reserve Bank of India's banking ban on crypto exchanges in March 2020. However, this boom has attracted the attention of various government agencies. Last year, ED issued a notice of staging for the Mumbai-based WazirX crypto exchange on transactions with cryptocurrencies worth 27.91 billion rupees (382 million US dollars).
Recently, the government introduced a controversial tax minimum, which is likely to increase the problems faced by the Indian crypto community.
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