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Crypto transactions violate forex rules, says Indian agency

By Vinu Lal

06:31, 19 July 2021

Indian economic intelligence agency for financial frauds, the Enforcement Directorate, questioned Indian virtual currency exchange WazirX for alleged violation of existing foreign exchange rules, according to unidentified sources as reported by The Economic Times on Monday.

In a notice served to the exchange, the Finance Ministry agency sought explanation from WazirX on how withdrawals from crypto exchanges would not amount to violation of Foreign Exchange Management Act, a law regulating foreign exchange in the country.

This challenges the underlying blockchain technology that governs crypto transactions, which allows the digital currency holders to freely transfer coins from their wallets to any wallet anywhere linked to the network.

Under scanner

Considering the generic nature of this notice, other digital currency exchanges operating in India could also face similar questions soon, the report added.

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The news report also quoted an official without naming, who said that select transactions were done without proper documentation, making it a route for money laundering. The agency highlighted transactions worth INR27.9bn that need an explanation from the exchange.

The agency served this notice to WazirX in June, as part of an ongoing money-laundering investigation it had initiated into Chinese-owned online betting applications. In that context, the directorate said that crypto inflows worth INR8bn and outflows of INR14bn were not available in the blockchain, the report added.

Read more: Hong Kong and Lithuanian regulators hit out at Binance

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