Virtual digital assets will now be covered under the Prevention of Money Laundering Act
In the latest move by the Finance Ministry, virtual digital assets such as Cryptocurrencies will now be covered under the Prevention of Money Laundering Act (PMLA) provisions.
What is the latest notification?
In the latest notification published in The Gazette of India notified on 7th March 2023, the Ministry of Finance (Department of Revenue) has put the following activities under the purview of the act.
- “exchange between virtual digital assets and fiat currencies;
- the 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.”
The notification also clarified that the meaning of virtual digital assets (VDA) should remain the same as under clause 47A, section 2 of the Income-tax Act, 1961. The clause is a comprehensive coverage of what is a virtual digital asset – “any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise” and “can be transferred, stored or traded electronically.”
What is the Prevention of Money Laundering Act (PMLA)?
The Prevention of Money Laundering Act, 2002, more commonly known as PMLA was enacted in 2002 to prevent money laundering. It also allows for the confiscation of property that is procured through money laundering.
Was the move expected?
For the longest time, the government has been expressing doubt about cryptocurrencies and how we should handle them cautiously. The latest move was expected as the government said it wants to regulate virtual digital currencies.
Also Read- RBI Governor calls to Ban Cryptocurrency: ‘Cryptocurrency akin to Gambling’
What is the implication of this move?
This move will help regulate the crypto market as well as other virtual assets such as NFTs (non-fungible tokens).
As the entities dealing with VDAs are now considered a “reporting entities”, they need to maintain records of their transactions, do KYC of the users as well as report suspicious activities to the Financial Intelligence Unit of India.
This is an essential step in ensuring that while India benefits from this technological development, it also plays cautiously and keeps the welfare of people in mind.
What are the reactions to this move?
Nischal, the founder of WazirXIndia, a leading crypto platform in India welcomes the decision by tweeting-
“All crypto businesses in the country would come under the ambit of PMLA
This is a good step towards regulating the crypto industry in India
This also ensures all crypto businesses must perform necessary KYC, transaction monitoring etc as part of their process. Good progress”
All crypto businesses in the country would come under ambit of PMLA
This is a good step towards regulating the crypto industry in India
This also ensures all crypto businesses must perform necessary KYC, transaction monitoring etc as part of their process.
Good progress ✌️ pic.twitter.com/lVhs5LWG4I
— Nischal (Shardeum) ⚡️ (@NischalShetty) March 8, 2023
KoinX, a crypto taxation app also tweeted- “This is a huge step for Crypto regulatory chain in India.”
Major breaking🚨: The Government of India 🇮🇳 has officially announced that all Crypto businesses (exchanges, custodians, wallet providers etc) would come under PMLA (Prevention of money laundering act 2022)
This is a huge step for Crypto regulatory clarity in India🔥 pic.twitter.com/HWyvNyrHEk
— KoinX (@getkoinx) March 8, 2023
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