The Indian government has recently announced that transactions involving cryptocurrencies and virtual assets will now fall under the purview of money laundering regulations. In a gazette notification issued by the Union Finance Ministry, it has been declared that virtual digital assets (VDAs) will be considered “reporting entities” under the Prevention of Money Laundering Act 2002 (PMLA). Cryptocurrency exchanges and intermediaries dealing with VDAs will now be required to conduct KYC (Know Your Customer) procedures for their clients and users. Additionally, they are obligated to report any suspicious transactions to the Financial Intelligence Unit of India (FIU-IND).
The notification also includes provisions that cover the administration, safekeeping, and control over VDAs, aiming to curb the potential misuse of digital assets. While the Indian government is yet to finalize comprehensive legislation and regulations pertaining to cryptocurrency, the Reserve Bank of India (RBI) has expressed concerns, considering cryptos to be similar to Ponzi schemes.
Finance Minister Nirmala Sitharaman has revealed that discussions are underway with other G20 member nations to establish a standard operating protocol for regulating crypto assets. This recent development reflects the government’s efforts to address the regulatory aspects of the cryptocurrency space in India.
What do experts have to say?
The recent decision by the Indian government to bring cryptocurrency and virtual assets under money laundering provisions has received positive feedback from industry experts. Sharat Chandra, Co-Founder of India Blockchain Forum, commends the move, stating that it requires crypto entities to adhere to KYC, anti-money laundering regulations, and due diligence practices similar to those followed by traditional financial institutions.
Sumit Gupta, CEO of CoinDCX, expresses his view that this development signifies progress towards a regulated crypto ecosystem. He highlights the legal requirement for entities like CoinDCX to conduct due diligence and enhanced due diligence under the Prevention of Money Laundering Act (PMLA).
The inclusion of cryptocurrencies and virtual assets under the money laundering provisions has generated further discussions among industry experts. Many view this move as a significant step towards regulating the crypto space in India.
Nischal Shetty, CEO of WazirX, a prominent Indian cryptocurrency exchange, welcomes the decision and emphasizes the importance of compliance in the crypto industry. He believes that integrating KYC and anti-money laundering measures will enhance the transparency and legitimacy of crypto transactions.
However, some experts also highlight the need for clear regulations and a comprehensive legal framework for cryptocurrencies in India. They argue that while the inclusion of virtual assets under the PMLA addresses money laundering concerns, broader regulatory guidelines are necessary to foster innovation and ensure investor protection in the crypto market.
The industry as a whole acknowledges that these steps by the government indicate a willingness to engage with the crypto sector and establish a regulatory framework. It is anticipated that ongoing discussions and consultations between policymakers, industry stakeholders, and regulatory authorities will lead to more robust regulations for cryptocurrencies in the future.
Also Read: Elegant Flower Gift Ideas To Spread Pleasant Fragrances Around
