Tax authorities in India have expressed money laundering concerns with investments and trading of cryptocurrencies like bitcoin.
As awareness and adoption of bitcoin grow in India, there are concerns among authorities about the potential for abuse by tax evaders and money launderers. According to the Economic Times, Indian tax authorities fear that trading of cryptocurrencies ‘could become conduits for illicit flows and the movement of black money.’
Income tax authorities and the Enforcement Directorate, an economic law enforcement and intelligence agency, are specifically looking into significant investments into buying the cryptocurrency following last year’s unprecedented demonetization effort which saw nearly 90% of India’s physical cash rendered obsolete overnight.
A senior tax department official told the publication:
There are issues with large investments flowing into this currency [bitcoin].
A ‘Special Investigation Team’ (SIT) on black (laundered) money – specifically appointed by the Supreme Court of India – is reportedly drawing up a draft report of what it has learned and is even suggesting ‘curbs’ in trading.
“There are concerns on the way it operates…Some unaccounted money could be flowing into these,” an unnamed official was cited as saying.
As reported by CCN in July, India’s Supreme Court demanded the government and the Reserve Bank of India (the country’s central bank to check bitcoin transactions so as to ensure they aren’t used for money laundering or terrorism funding.
India’s bitcoin industry remains unregulated after years of getting the cold shoulder from authorities. The significant growth in both its popularity and adoption pushed the government into establishing an interdisplinary ‘virtual currency committee’ to study and propose a regulatory framework for digital currencies in India, earlier this year.
As such, the speculative outcome is to see Indian authorities regulate the country’s digital currency industry, with a ban highly unlikely. Regulation of the industry is also likely to coincide with taxation of bitcoin adopters in the general public.
Featured image from Shutterstock.Advertisement