Crypto raises serious concerns for government: SC Garg

New Delhi: More than addressing the issue of legitimising cryptocurrencies in India in the upcoming Bill, the Union government is now facing deeper challenges like crypto being potentially misused for hawala and money laundering, investments worth billions of dollars escaping to abroad and capital gains tax being avoided by the trade exchanges as well as investors, Subhash Chandra Garg, former Finance Secretary of India, said on Tuesday.

While Union Finance Minister Nirmala Sitharaman had emphasised that not all windows on cryptocurrencies will be shut down, Garg, a pioneer in formulating policies around crypto, sees a lot of new and serious concerns coming through those windows, as the policymakers struggle to find answers as to how to deal with the highly-volatile crypto situation.

"Crypto was not created in India. Our people are now buying those digital coins via various exchanges and apps (several of them listed at foreign shores) without understanding the inherent risks. Billions of dollars were being transferred abroad sans any capital gains tax. We have so much regulation on foreign currency exchanges and here we have no regulation on crypto exchanges, which is a huge policy concern," Garg said. Garg headed the inter-ministerial committee (IMC) that drafted the cryptocurrency bill entitled "Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019".

The government aims to table the crypto bill in the winter session of the Parliament commencing from November 29, amid grave concerns now being raised over the misuse of digital coins on the Dark Web for terror acts and drug trafficking by militant organisations, money laundering and hawala-based transactions — posing a severe threat to the national security and a big challenge to the security agencies in India.

On Saturday, when Prime Minister Narendra Modi chaired a high-level meeting on the subject, concerns were flagged over lack of transparency in the industry, as this can lead to terror financing through money laundering.