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On 7th March, 2023 the Indian government announced that it has imposed anti-money laundering provisions on the cryptocurrency sector and will come under the Prevention of Money-laundering Act, 2002 (PMLA). In today’s article we try to explain how bringing crypto under PMLA is a step in the right direction.
The Indian government under the IT law of 1961 has defined virtual digital assets as any number, token or information which is derived from any cryptographic means and has certain value such as Bitcoin, cryptocurrencies or NFTs.
Entities involved in the exchange between VDAs and Fiat currencies or transfer of VDAs or safekeeping and administration of VDAs, and participation in financial services related to an issuer’s offer and sale of a VDA would be ‘reporting entity’ for the purpose of the PMLA.
The gazette announcement (Link), mentions that entities or individuals that act as service providers for activities mentioned below will come under the PMLA act.
(i) exchange between virtual digital assets and fiat currencies;
(ii) exchange between one or more forms of virtual digital assets;
(iii) transfer of virtual digital assets;
(iv) safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets; and
(v) participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asse
Many experts believe that bringing crypto under PMLA is progressive step towards regulating crypto currencies in India. The latest move is viewed positively by the crypto sector. Founders of a few crypto exchanges recognized the move as a right step towards bringing regulation to the VDAs.
Giottus CEO Vikram Subburaj believes that PMLA will ensure that KYC is no longer best practice but a compliance requirement and the company will continue to adhere to their robust due diligence policies
CoinSwitch co-founder Ashish Singhal tweeted the notification to bring VDA transactions under PMLA is a positive step in recognizing the sector.
Nischal Shetty states that is a good step towards regulating the crypto industry in India and will ensure necessary KYC, transaction monitoring is carried out by the entities
The new amendment throws light on the position on the KYC and reporting requirements for crypto exchanges and intermediaries in the country. Having a clear record of KYC will enable government to track any instances of money laundering
The government of India, recently led the G20 summit discussions on cryptocurrency regulation among G20 finance ministers and central bank governors and have asked International Monetary Fund (IMF) and the Financial Stability Board (FSB) to collaborate on a research paper to help countries formulate comprehensive crypto policies. All these actions indicate that there is a clear push to arrive at a global consensus on the suitable regulatory framework for cryptocurrency.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.