Finance Minister Nirmala Sitharaman warns about cryptocurrencies

Following the Enforcement Directorate (ED) action against some firms belonging to the crypto segment, Finance Minister Nirmala Sitharaman has warned against cryptocurrencies. “The government has already given a warning. I think we should proceed with caution,” he said. ED has started investigation of some crypto exchanges on suspicion of money laundering.

However, at the same time, Sitharaman said that there is a lot of potential in blockchain technology and those involved in the Web 3 ecosystem should not feel that the government is against the technology. He said that the central government wants to promote distributed ledger technology. The ED has frozen assets of at least two crypto exchanges in the past one month. The ED has decided to freeze the assets of Singapore-based crypto exchange Vuld worth about $46 million. The ED said these assets are in bank accounts, balances of payment gateways and wallets on the Flipvolt crypto exchange. In this case, raids were conducted at several premises associated with the firm.

In this regard, a press release issued by the ED said, “These are proceeds of crime due to erroneous methods of lending. The cryptocurrency purchased from it was transferred to an unknown foreign crypto wallet address.” The ED said that the assets which have been frozen in India related to Vauld’s firm will be released only after giving full details of the fund. Vault banned user transactions on its platform in June following a sharp drop in the stablecoin TerraUSD. Flipvolt has its unit in India. Earlier this month, the ED had frozen nearly $8 million in assets of crypto exchange WazirX.

Last year more than seven percent of the people in the country had digital currency in the form of cryptocurrency. UNCTAD, a UN trade organization, has reported that the use of cryptocurrencies has increased worldwide, including in developing countries, during the Corona epidemic. UNCTAD has released data on the top 20 countries holding digital currencies last year. Ukraine ranks first in this. About 12.7 percent of Ukraine’s population had a digital currency. India is at the seventh position in this list. UNCTAD states that cryptocurrencies are a volatile financial asset and can cause losses.

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