Indian Government Reveals Inspection of Bitcoin Businesses, Informs Parliament of Results

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The government of India has informed Lok Sabha, the lower house of parliament, about the Ministry of Corporate Affairs’ inspection of cryptocurrency businesses. Minister of State for Finance and Corporate Affairs Anurag Singh Thakur provided details of two companies in particular. This follows the landmark ruling by the country’s supreme court which quashed the banking ban imposed by the central bank, the Reserve Bank of India (RBI).

Also read: Bitcoin Legal in India — Exchanges Resume INR Banking Service After Supreme Court Verdict Allows Cryptocurrency

Ministry of Corporate Affairs Inspects Bitcoin Companies

Minister of State for Finance and Corporate Affairs Shri Anurag Singh Thakur answered several questions in Lok Sabha on Monday regarding the government’s inspection of bitcoin companies. He specifically mentioned two crypto businesses: Zeb IT Services Ltd. and Unocoin Technologies Ltd.

According to Lok Sabha’s record, the questions concern “fraud by bitcoin companies.” Particularly, Thakur was asked about companies dealing in bitcoin that “are repeatedly violating rules laid out by the Corporate Affairs Ministry by not filing annual balance sheets.”

In his written answer to Lok Sabha, Thakur explained: “Bitcoin companies are not defined under the Companies Act. However, the Ministry of Corporate Affairs (MCA) has conducted inspection through Registrar of Companies (RoC), Ahmedabad, in the matter of Zeb IT Services Private Limited to examine the aspect with regard to dealing in bitcoins.” He elaborated:

Based on the findings, prosecutions have been filed for violations under various provisions of the Companies Act and the same also have been concluded on payment of penalty on the compounding application(s) filed by the company.

Furthermore, the minister clarified that Zeb IT Services has filed its balance sheet and relevant annual return as of March 31, 2019, adding that the company is under liquidation.

He also revealed that there is another bitcoin company registered with the Registrar of Companies in Karnataka. Unocoin Technologies Private Limited “is in the business of developing online market platform to facilitate and conduct buy, sell, store, and accept bitcoins,” Thakur told Lok Sabha. He proceeded to confirm that this company “is up to date in filing statutory returns and no complaint has been received.”

While India still does not have laws to directly regulate the crypto industry, experts have suggested that the Companies Act can be used to indirectly regulate cryptocurrency businesses. Many crypto companies, however, are registered outside of India.

Zeb IT Services operated crypto exchange Zebpay which shut down its Indian operations in September 2018 after the RBI banned banks from providing services to crypto businesses. The company subsequently moved overseas. Zebpay relaunched in India earlier this month with new management. It is now operated by Awlencan Innovations Australia Ltd., a company located in Camberwell, a suburb of Melbourne. The inspection of Zeb IT Services dates back to 2018. In July that year, the Ministry of Corporate Affairs was asked similar questions in Lok Sabha. In his reply, then Minister of State for Law and Justice and Corporate Affairs, Shri P. P. Chaudhary, explained that regarding this company, “the Ministry of Corporate Affairs has, vide order dated 15/3/2018, ordered inspection of books of accounts … to examine inter alia the aspect of dealing in bitcoin.”

Indian Crypto Sector Rebuilding Post Supreme Court Verdict

The Indian crypto industry has seen many changes so far this year. On March 4, the supreme court quashed the RBI’s April 2018 circular that banned regulated financial institutions from dealing in cryptocurrency. The court ruled that this circular was unconstitutional.

Following the supreme court verdict, cryptocurrency exchanges in India resumed INR services. However, some major banks — including HDFC and Indusind Bank — still refuse to open accounts for crypto businesses as they are waiting for the RBI to provide further instructions regarding the banking ban. HDFC is India’s largest bank by market capitalization.

The RBI is reportedly planning to file a review petition with the supreme court on the grounds that the anonymous nature of cryptocurrency poses a threat to India’s banking system. The central bank has until April 3 to do so. Meanwhile, more global companies have started expanding their operations into India.

Do you think the Indian government has warmed up to cryptocurrency after the supreme court verdict? Let us know in the comments section below.

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Images courtesy of Shutterstock, the Deccan Herald, and Anurag Thakur.

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