Citing CoinDCX, media reports said the ED is seeking details on how crypto exchanges in the nation work overall.
India still awaits a more detailed legal framework governing the crypto sector
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A bunch of crypto exchanges in India have found themselves embroiled in a legal controversy. CoinDCX, WazirX, and CoinSwitch Kuber have been served notices by the Directorate of Enforcement (ED), India's financial watchdog. The exchanges will be probed in cases of money laundering and violating foreign exchange laws. Along with ED, authorities concerned with India's foreign exchange management act (FEMA) will also be part of the investigations on these crypto exchanges.
FEMA is "to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India."
“Crypto is an early-stage industry with a lot of potential. We receive queries from various government agencies. Our approach has always been that of transparency,” a CoinSwitch spokesperson told Gadgets 360.
Citing CoinDCX, media reports said the ED is seeking details on how crypto exchanges in the nation work overall.
Both CoinDCX and WazirX have claimed to be in compliance with India's laws and are ready to work with the law enforcement agencies.
The development comes at a time when the Indian crypto sector is already struggling under market volatility and the implementation of new tax laws. It may further impact the trading volumes on these exchanges.
Already, the average daily transaction volume on Indian exchanges WazirX, CoinDCX, BitBNS, and Zebpay reportedly dipped to $5.6 million (roughly Rs. 44 crore) in the last few days. Up until June, this volume was around $10 million (roughly Rs. 80 crore).
Not only is the global crypto industry going through a downtime, but India's one percent TDS law on each crypto transaction, has dented trading volumes of these virtual digital assets.
India still awaits a more detailed legal framework governing the crypto sector, work on which is ongoing under Sitharaman's supervision.
Meanwhile, this is not the first time that Indian exchanges have bene summoned by law enforcement authorities.
In June 2021, WazirX received a show cause notice from the ED for contravention of the FEMA, 1999, for cryptocurrency transactions worth Rs. 2,790.74 crore.
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