The finance ministry announced today that cryptocurrencies transactions would come under the ambit of money laundering provisions. In a notification, the government said that participation in transactions with virtual assets would be under the Prevention of Money Laundering Act PMLA. The move is the latest step taken by the government to tighten oversight of digital assets.
The ministry warned investors against participation in and provision of financial services related to an issuer's offer and sale of a virtual asset. The notification said that the transfer of virtual assets would fall under PMLA laws.
Ashish Singhal, co-founder of CoinSwitch, said the notification to bring VDA transactions under PMLA was a positive step in recognition of the sector.
According to the Income tax act, a 'virtual digital asset' refers to any information, code, number, or token not being Indian currency or foreign currency generated by criptographic means or otherwise and can be called by whatever name.
The Enforcement Directorate, which has the responsibility of investigating money laundering and forex violations cases, has already been investigating a number of exchanges, including CoinSwitch Kuber and WazirX.
The move by India aligns with the trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers, said Jaideep Reddy, counsel at law firm Trilegal.