India probes unregulated bitcoin exchanges after valuations jump

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India’s income tax officials are investigating transactions at various illegal bitcoin exchanges, a week after the country’s central bank cautioned users of the virtual currency about potential risks.

The surveys are being conducted by the Income Tax Department on virtual currency exchanges across the country, including cities of Mumbai, Bengaluru, Gurgaon and Delhi, Surabhi Ahluwalia, spokeswoman for the department, said by phone. She declined to say if the visits were to investigate tax evasion or money laundering.

Bitcoin has soared about 17-fold this year as people rushed to buy the digital currency in the hope it will become an alternative to gold or traditional money. Virtual currencies do not have a legal status in India and the central bank has cautioned citizens from buying or transacting in them. It said in a Dec. 5 statement that that it had not permitted cryptocurrency exchanges from operating in Asia’s third-largest economy.

The survey is for gathering evidence to establish the identity of investors and traders, their transactions and related bank accounts used, Press Trust of India reported earlier today without saying where it got the information from.

Read what other central banks are saying about digital currencies hereThe federal government has set up a panel headed by Economic Affairs Secretary Subhash Chandra Garg to decide on India’s stand on virtual currencies, people with knowledge of the matter said on Dec. 12. Other members of the panel include Securities and Exchange Board of India Chairman Ajay Tyagi and Reserve Bank of India’s Deputy Governor B.P. Kanungo, the people said, asking not to be identified as the decision was not public.

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