In a major development, the Indian finance ministry has brought crypto or virtual asset businesses under the ambit of the Prevention of Money Laundering Act, 2002 (PMLA). This means that Indian crypto exchanges will now have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
The gazette paper issued by the Government of India states:
“Participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset… For the purposes of this notification ‘virtual digital asset’ shall have the same meaning assigned to it in Clause (47A) of Section 2 of the Income-Tax Act, 1961 (43 of 1961).”
Experts have hailed this move as a step towards greater compliance in the crypto industry. Sharat Chandra, Co-Founder of India Blockchain Forum, said, “It mandates entities dealing in crypto to follow KYC, anti-money laundering regulations and due diligence as followed by banking and other financial entities which fall under the classification of reporting entities under PMLA.”
The Indian crypto industry is welcoming the recent move by the finance ministry to bring virtual asset businesses under the ambit of the Prevention of Money Laundering Act.
According to Sumit Gupta, Co-Founder and CEO of CoinDCX, this is a step towards a more regulated crypto ecosystem in India. Gupta stated that entities such as CoinDCX will now be required by law to conduct due diligence and enhanced due diligence under the PMLA, which will ultimately lead to greater legitimacy and stability in the industry.
The move by the Indian finance ministry comes as part of a wider push towards greater regulation of the crypto industry in India. This move follows recent actions by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to tighten the rules around crypto trading and investing.