The Indian finance ministry has declared that transactions involving cryptocurrency will now be subject to money laundering regulations. According to a notification issued by the government, participation in virtual asset transactions will be governed by the Prevention of Money Laundering Act (PMLA)
The government’s decision to bring cryptocurrency transactions under the ambit of money laundering provisions is part of a broader effort to enhance regulation and oversight of digital assets in India. This move is in line with a global trend that seeks to impose anti-money laundering standards on digital asset platforms, similar to those applied to other regulated entities such as banks and stockbrokers.
The finance ministry’s warning against investing in or providing financial services related to the sale of virtual digital assets has been published in the gazette. The notification also specifies that the exchange and transfer of these assets will now be governed by money laundering laws. Co-founder of CoinSwitch, Ashish Singhal, has praised the decision, stating that it is a positive step towards acknowledging the sector. As per the Income Tax Act, a “virtual digital asset” refers to any code, number, information, or token generated through cryptographic means or other methods, excluding Indian or foreign currency, and can be referred to by any name.
The Enforcement Directorate, which is responsible for investigating cases of foreign exchange violations and money laundering, has been actively investigating cryptocurrency companies in India, including exchanges such as CoinSwitch Kuber and WazirX.
