India probes unregulated bitcoin exchanges after valuations jump

Ivan Schwartz
December 15, 2017

Bitcoin hit another all-time peak on Tuesday, two days after the launch of the first ever bitcoin futures on a USA exchange as investors grew optimistic that the $20,000-mark is within reach. India's tax authority fears that as Bitcoin popularity is growing at a rapid speed, it might trigger the creation of several e-Ponzi schemes and hence to safeguard investors against these risks, the tax department is investigating Bitcoin exchanges operating within the country.

Be careful, as the Income Tax (I-T) Department on Wednesday conducted survey operations at major Bitcoin exchanges across the country.

We are looking at collecting information about modus-operandi of bitcoin exchanges, investors, their source of investment and possibility of collecting tax.

The survey teams are reportedly bagged with various financial data about the working of these exchanges.

Under section 133A of the IT Act, the survey is being conducted for gathering evidence in order to establish the identity of investors and traders, transaction undertaken by them, identity of counterparties, related bank accounts used, among others.

Last week, India's central bank warned "users, holders, and traders" of cryptocurrency related risks.

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The Reserve Bank of India isn't altogether keen on citizens dabbling in these currencies, as they aren't regulated.

According to the report, the virtual currency has recorded monthly trades of an estimated to be between Rs5,000 crore and Rs10,000 crore with an average 50,000 people registering everyday on Bitcoin exchanges.

Speaking to Reuters, Surabhi Ahluwalia, spokeswoman for the department, said that the department trying to find a way to tax bitcoin transactions.

This year, the government told parliament that the use of virtual currencies like bitcoin was not authorised by the RBI and could result in breach of anti-money laundering laws.

Since payments in Bitcoin can be made without banks and that too anonymously, it is also popular with criminals and others who want to handle money anonymously.

Last month in November 2017, the Supreme Court of India issued a notice to the central bank to work with the finance ministry and create a regulatory framework for cryptocurrency operations in the country. "The government's position is clear, we don't recognize this as legal currency as of now".

Other reports by GizPress

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