The government of India has taken yet another step toward regulating digital assets by imposing money laundering rules on the crypto industry.
While needing Anti-Money Laundering (AML) requirements for cryptocurrency is nothing new, it is only now that the Indian government has chosen to inform all interested parties of the requirement to abide by the country’s AML statute.
Several cryptocurrency transactions, including the exchange, transfers, safekeeping, and administration of virtual assets, are now covered by the Prevention of Money-Laundering Act (PLMA) 2002, according to a notification from the Ministry of Finance that was published in The Gazette of India on March 7.
The PMLA also applies to financial services connected to an issuer’s offer and sale of virtual assets. The notification is brief, but the PMLA requires financial institutions to keep a record of all transactions for the last 10 years, turn these information over to authorities upon request, and confirm the identification of every client.
The notification, which was released as regulators around the world tighten AML regulations for cryptocurrency, will make it more difficult for Indian crypto businesses to operate.
And in recent years, it has already not been very comfortable. According to revised tax regulations, holdings and transfers of digital assets would be subject to a 30% tax starting in March 2022.
After 10 days of the new tax policy, trading volume on significant cryptocurrency exchanges in India decreased by 70%, and by approximately 90% over the following three months.
The strict tax laws prompted emerging cryptocurrency projects to leave India and drove cryptocurrency traders to offshore exchanges. Indian authorities once more showed their severe attitude on cryptocurrencies in February 2023 by outright banning cryptocurrency sponsorships and advertising in the neighborhood women’s cricket league.
This came after a prior prohibition for the men’s cricket Premier League, which was put in place back in 2022.In 2023, Nirmala Sitharaman, India’s finance minister, called for international action to control cryptocurrencies as the country was celebrating its maiden G20 chairmanship.
She urged a concerted effort “for establishing and comprehending the macro-financial consequences,” which might be applied to change cryptocurrency legislation globally.
