Crypto regulation in India: Government of India sends notice to include virtual assets for cryptocurrencies

According to the Union Finance Ministry, money laundering regulations would apply to cryptos and VDAs.
A notification was released regarding this
The requirement for cryptocurrency exchanges to disclose any suspicious transactions

According to the most recent decision made by the central government regarding digital assets, businesses dealing in cryptocurrencies or virtual assets will now be covered by the PMLA, or Prevention of Money Laundering Act 2002.

According to the gazette notification published on March 7 by the Union Finance Ministry, virtual digital assets (VDAs) will now be regarded as “reporting entities” under the PMLA. Additionally, it is required of cryptocurrency exchanges and intermediaries that deal with VDAs to undertake KYC on their users and clients. Additionally, cryptocurrency exchanges are obligated to notify the Financial Intelligence Unit of India (FIU-IND) of any questionable transactions.

According to the notification, the Act will also apply to the management or storage of VDAs as well as the tools that provide control over VDAs.

The above move has been taken to tighten the misuse of digital assets and is a step towards regulating this space. Here, it is pointed out that the Indian government is yet to finalise legislation and regulations regarding cryptocurrencies, though the RBI is of the opinion that cryptos are akin to a Ponzi scheme.

In fact, last month, Finance Minister Nirmala Sitharaman stated that the country was in discussions with other G20 member nations regarding the need to formulate a standard operating protocol for regulating crypto assets.

What do professionals think?


Following the notification’s distribution, a number of business professionals praised the Centre for taking this action. To quote Sharat Chandra, co-founder of the India Blockchain Forum, “It mandates entities dealing in cryptocurrency 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.”

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