The Finance Ministry of India released a circular on March 7 which stated that virtual assets and cryptocurrency will also fall under the country's money laundering provisions. As per the circular, Indian Cryptocurrency Exchanges have to monitor and report suspicious activity to the Financial Intelligence Unit-India. The exchanges will also have to maintain a record of the KYC documents of customers registered on the exchanges.
Bringing virtual assets under the Prevention of Money Laundering Act (PMLA) will ensure that the new-age assets are brought under the authorities' vigilance as is the case with bank accounts. The basic nature of cryptocurrency prevents establishing a clear paper trail for the history of transactions, unlike bank transactions that can be tracked to the last paise.
While cryptocurrency and virtual assets are permitted for transactions in India, the government has a conservative approach towards them and is working towards bringing the unregulated sector under standardized regulations. The FM Nirmala Sitharaman had stated in the Lok Sabha “Whether it is the crypto mining, assets or transactions, we recognise that it's completely driven by technology and a standalone country's effort in controlling and regulating it is not going to be effective”, on February 13. RBI governor Shaktikanta Das likened crypto to gambling and had said “If crypto is allowed in India, the RBI will lose control over monitoring transactions," in January this year.
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