The finance ministry, through a circular issued March 7, brought crypto and virtual assets under money laundering provisions.
Now, transactions which involve exchanges, transfers, and the safekeeping of crypto assets come under the Prevention of Money Laundering Act 2002 (PMLA).
Here's what the circular says:
As per the government-issued gazette paper, Indian crypto exchanges are now required to report suspicious activities to the Financial Intelligence Unit-India (FIU-IND). Crypto exchanges and intermediaries handling virtual digital assets (VDAs) must have KYC documentation for all onboarded customers.
What this means:
According to the notification, entities that deal in crypto assets must follow KYC, anti-money laundering rules, as well as due diligence that is followed by banking and other financial bodies falling under the classification of reporting things under PMLA.
This circular is intended to help investigation agencies carry out actions against crypto companies as agencies like the Enforcement Directorate (ED) and the Income Tax Department (I-T) have been carrying out probes into many cases against companies that run crypto exchanges and transactions.
Thus far, the Reserve Bank of India (RBI) has cautioned people against crypto assets, with Governor Shaktikanta Das saying in January that crypto was a poor gamble and would eventually undermine the central bank's power if it grew unchecked.
Meanwhile, Finance Minister Nirmala Sitharaman told the Lok Sabha on February 13, that be it crypto mining, assets or transactions, India recognises it is completely driven by technology and a sole country's effort in controlling and regulating the same won't be effective.
At the recent G20 meet, with India as host, the nation asked the International Monetary Fund (IMF) and Financial Stability Board (FSB) to together prepare a technical paper on crypto assets, which can be used to formulate a coordinated and comprehensive policy for their regulation.