India’s stance on cryptocurrency and token transactions has been a topic of much discussion in recent times. Now, the country’s finance ministry has issued a notice outlining its plan to regulate virtual digital assets and clarifying the application of anti-corruption regulations in the Prevention of Money Laundering Act (PMLA) to the crypto industry.
The notice states that any digital information, code, number, or token created through cryptography or any other method, excluding Indian cash or foreign currency, will be classified as a “virtual digital asset” under the income tax act.
The Indian government has also urged individuals to avoid engaging in financial services related to offering and selling virtual digital assets.
This move will have significant implications for stakeholders in the crypto industry. The Indian government has classified crypto exchanges, wallet providers, custodians, and related businesses as “reporting companies” under the PMLA.
These companies must collect complete information on their investors and anyone else exchanging digital assets, adhere to KYC/AML standards, and report to financial institutions, payment processors, and other intermediaries.
This regulation will permit crypto exchanges to report suspicious activity to the appropriate Indian authorities, providing much-needed direction for developing crypto in India.
India makes a positive step toward crypto regulation
While the Reserve Bank of India (RBI) has previously warned against the use of cryptocurrency, the country has yet to finalize its cryptocurrency laws.
The administration of Prime Minister Narendra Modi has been pushing for a more comprehensive international agreement on digital assets as part of India’s leadership role in the G20 forum.
The recent decision to regulate the crypto industry more effectively is a positive step towards supporting the growth of crypto in India. It underscores the Indian government’s commitment to regulating the industry, providing direction for stakeholders, and promoting the development of crypto responsibly and sustainably.