India brings cryptocurrency transactions under PMLA

The finance minister announced today that cryptocurrency transactions will now be subject to the aim of money laundering regulations. The government has announced that inclusion in transactions involving virtual digital assets would be under the Prevention of Money Laundering Act PMLA.

In the gazette, the government said investors should not participate in and provide financial services related to an issuer's offer and sale of a virtual digital asset. Exchange and transfer of virtual digital assets would also fall under PMLA laws, the notification said.

The notification to bring VDA transactions under PMLA is a positive step in recognizing the industry, said CoinSwitch co-founder Ashish Singhal.

The Income Tax Act declares that virtual digital assets refer to all information, code, number, or token not being Indian currency or foreign currency generated through cryptographic methods or otherwise and can be called by any name.

The Enforcement Directorate, which has the authority to investigate money laundering and forex violations, has been investigating cryptocurrency companies such as exchanges CoinSwitch Kuber and WazirX.

The latest move by India aligns with a worldwide trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated institutions like banks or stock brokers, Reddy said.