Parul
The government has imposed money laundering provisions on cryptocurrencies or virtual assets as it looks to tighten oversight of digital assets.
In a gazette notification, the Finance Ministry said the anti-money laundering legislation has been applied to crypto trading, safekeeping and related financial services.
After this, Indian crypto exchanges will have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
Sanctions drive crypto transfers to illegal addresses to an all-time high: Chainalysis report says the move is in line with the global trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers.
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Digital currency and assets like NFTs (non-fungible tokens) have gained traction globally over the last couple of years. Trading in these assets has increased manifold with cryptocurrency exchanges being launched. However, India, till last year, did not have a clear policy on either regulating or taxing such asset classes.
The notification said, “Exchange between virtual digital assets and fiat currencies, exchange between one or more forms of virtual digital assets, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset” will be now be covered by Prevention of Money-laundering Act, 2002.
Virtual digital assets were defined as any code or number or token generated through cryptographic means with the promise or representation of having inherent value.
Last month, Finance Minister Nirmala Sitharaman told Parliament that India was discussing with the G-20 member countries the need to develop a standard operating protocol for regulating crypto assets.
