Tax Investigators Raid Bitcoin Exchanges Across India

Investigators from the income tax department of India have conducted onsite searches at the offices of the country’s top nine bitcoin exchanges early on Wednesday morning.

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Government officials told the Indian news agency PTI that multiple teams of detectives from the tax department, under the command of the Bengaluru investigation wing, surveyed the trading venues in Delhi, Bengaluru, Hyderabad, Kochi, and Gurugram.

This action was taken under section 133A of the Indian Income Tax Act for “gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counter-parties, related bank accounts used, among others,” according to the quoted officials.

The teams of detectives are said to be armed with various financial data and inputs about the workings of the exchanges. Reports called this the first big action against the exchanges operating in the country, suggesting that more is to come.

Regulations Are in the Works

Reports from India indicate that the authorities are preparing a regulatory and legal framework to try and deal with what they see as the challenges bitcoin trading poses, led by the country’s central bank in cooperation with other government agencies.

In November India’s finance minister Arun Jaitley said: “Recommendations are being worked at. The government’s position is clear, we don’t recognize this as legal currency as of now.” This came after the Supreme Court of India issued a notice to the nation’s central bank and related financial ministries to hasten their regulatory mechanisms with regard to bitcoin.

It is feared among the local bitcoin community that these upcoming regulations will define trading activities as illicit. However, there are also indications that they might focus instead on ICO ponzi schemes as those have been getting more heat lately.

Bitcoin trading soared in India recently with some of the country’s top exchanges Zebpay, Coinsecure, Unocoin, and Bitxoxo reporting a huge influx of new users as well as massive trade volumes. Some of the new interest in bitcoin comes from ‘high net worth’ individuals which might have pushed the tax authorities to send a signal with this latest action.

Are tax authorities around the world going to follow their U.S. IRS and Indian counterparts soon? Share your thoughts in the comments section below!

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