India Mandates Anti-Money Laundering Rules for the Crypto Industry

India mandates anti-money laundering rules for the crypto industry to tighten oversight of assets

To tighten its control over digital assets, the government of India has established anti-money laundering regulations on cryptocurrencies and other virtual assets.

The Finance Ministry said in a gazette notice that the anti-money laundering laws have been applied to cryptocurrency trading, storage, and associated financial activities.

Following that, Indian cryptocurrency exchanges must notify the Financial Intelligence Unit India of any questionable behavior (FIU-IND). The action is in keeping with a global trend that calls for digital asset platforms to adhere to anti-money laundering regulations that are comparable to those that apply to other regulated companies like banks or stock brokers.

During the past few years, the use of digital money and assets like NFTs (non-fungible tokens) has spread around the globe. With the introduction of cryptocurrency exchanges, trading in these assets has grown. Yet up until last year, India lacked a clear strategy for either regulating or taxing these asset classes.

According to the notification, "Participation in and provision of financial services related to an issuer's offer and sale of a virtual digital asset, exchange between one or more forms of virtual digital assets, exchange between one or more forms of virtual digital assets, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets" will now be covered by Prevention of Money-laundering.

Any code, number, or token created using cryptographic techniques with the promise or representation of having intrinsic worth was characterized as a virtual digital asset.

The necessity to create a common operating procedure for regulating crypto assets was something that India was considering with the G-20 members, according to Finance Minister Nirmala Sitharaman's testimony to Parliament last month.

She had said that Web3 and crypto assets were still relatively new and developing industries that needed substantial international cooperation to be adequately regulated.