In a gazette notification, the finance ministry said the anti-money laundering legislation has been applied to crypto-trading, safekeeping and related financial services. File | Photo credit: Reuters
The government has imposed anti-money laundering provisions on cryptocurrencies or virtual assets as it looks to tighten oversight of digital assets.
In a gazette notification, the finance ministry said the anti-money laundering legislation has been applied to crypto-trading, safekeeping and related financial services.
Indian crypto exchanges will then have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
The move is in line with the global trend of requiring digital asset platforms to follow anti-money laundering standards followed by other regulated entities such as banks or stockbrokers.
Digital currencies and assets such as NFTs (Non-Fungible Tokens) have gained global attention over the past few years. With the launch of cryptocurrency exchanges, the trading of these assets has increased manifold. However, until last year India had no clear policy on how to regulate or tax such asset classes.
“Exchanges between virtual digital assets and fiat currencies, exchanges between one or more forms of virtual digital assets, transfers of virtual digital assets, safekeeping or management of virtual digital assets or devices that control virtual digital assets,” the notification said. Enables, and participates in. and shall cover the provision of financial services related to the issuer’s offering and sale of a virtual digital asset. Prevention of Money Laundering Act2002.
Virtual digital assets were defined as any code or number or token generated by cryptographic means that has the promise or representation of having an inherent value.
Last month, Finance Minister Nirmala Sitharaman told Parliament that India was in talks with G-20 member states. A standard operating protocol needs to be developed to regulate crypto assets..
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He said that crypto-assets and the Web3 are relatively new and developing areas and any specific legislation on these areas requires significant international cooperation to be fully effective.
Crypto-assets are borderless by definition and require international cooperation to prevent regulatory arbitrage. Therefore, any legislation for regulation or restriction can only be effective with significant international cooperation for the assessment of risks and benefits and the evolution of common classifications and standards.
I Budget for 2022-23, he introduced a 30% tax on income from transactions in such assets. Also, to bring such assets under the tax net, it introduced 1% TDS (tax deducted at source) on transactions in such asset classes above a certain threshold. Gifts of crypto and digital assets were also taxed.
