Cloud over crypto regulations amid money laundering charges

Bengaluru, August 13 Regulation on cryptocurrencies has received a set back with many players now indicating a delay in such legislation as ongoing investigation into various exchanges on money laundering charges has put the efforts on the back burner.

Earlier, Union Finance Minister Nirmala Sitharaman has called for global cooperation on regulating crypto assets as these assets can't be regulated by any one nation.

Moreover, ongoing investigation into money laundering charges has dampened sentiment around legislation. Last week, the Enforcement Directorate said that it had conducted raids on one of the directors of Zanmai Lab, which owns crypto exchange WazirX. It had frozen bank balances and accused the entity of helping other bodies route funds out of the country through crypto route.

The ED also last Friday said that it has frozen assets worth Rs 370 crore belonging to a Bengaluru-based company lying with Flipvolt Technologies, the Indian entity of beleaguered cryptocurrency platform Vauld. The investigative agency said that as many as 23 NBFCs and fintech firms diverted funds to the tune of Rs 370 crore into the 'INR wallets' of Yellow Tune hosted with Vauld's Indian entity.

"These amounts were nothing but proceeds of crime derived from predatory lending practices. Crypto currency so purchased was transferred to various unknown foreign wallet addresses," the ED has said alleging that it was part of money laundering operation.

Such investigations have created uncertainty over the upcoming legislation, which is currently under deliberations. Meanwhile, the Reserve Bank of India is fiercely opposed to the idea of legalising cryptocurrencies through regulation.

Indian crypto exchanges are already facing exodus of investors amid fall in crypto prices along with ongoing investigation by government authorities.

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