Authorities with India's Income Tax Department have appeared in person to conduct "surveys" of nine bitcoin exchanges that have been operating in the country.
A senior official with the agency said that the purpose of the visits was to gather "evidence to establish the identity of investors and traders, transactions undertaken by them, identity of the counterparties, related bank accounts used" and more, and that these drop-ins did not constitute raids.
The Bengaluru wing of the department, which falls under the body's Karnataka and Goa directorate, sent representatives to exchanges in Bengaluru, New Delhi, Hyderabad, Kochi, Kolkata, and Gurugram to collect pertinent information, beginning in the early morning.
Some department officials, speaking to the Times of India, suggested that tax evasion was probable, and related that further action might be taken if the surveys yielded information supporting that assumption. Another explained that "the surveys are being conducted to understand the kind of digital transactions being done in bitcoin exchanges, and to know the dynamics of the sector as such."
The Reserve Bank of India (RBI) and the Securities and Exchange Board of India have reportedly been drafting a policy document on the regulation of cryptocurrencies after the Supreme Court issued a notice seeking their comments on the matter. The judicial body did so during a public interest litigation hearing in response to a petition requesting a clarification of the digital assets' legal status.
The Income Tax Department conducted its surveys about a week after the RBI warned consumers of certain risks involved in trading cryptocurrencies.
Bitcoin's presence in India briefly captured international attention during the country's November 2016 demonetization drive, when it sought to remove certain denominations of rupee notes from circulation in a purported effort to curb corruption. The transition was widely considered to be disastrous, with long lines forming outside certain banks, some of which ran out of the valid notes that they were supposed to exchange for the soon-to-be-retired ones. The move also coincided with weather events that knocked out power in some parts of the subcontinent, further complicating the process. At the time, bitcoin trading volumes spiked in the nation, as the token traded at a premium on Indian exchanges compared to those in other countries.