11th March 2023 (7 Topics)
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Belated but Essential
In a gazette notification, the Finance Ministry said the anti-money laundering legislation has been applied to crypto trading, safekeeping and related financial services.
- After this, Indian crypto exchanges will have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
Issues with crypto currencies
- Criminal misuse: FATF has been continuously flagging the potential that virtual digital assets have for criminal misuse considering the speed and anonymity.
- Absence of a regulatory framework: Few countries have moved to regulate virtual assets, while a majority have not taken any action. It has created a global system with loopholes for criminals and terrorists to abuse.
- Money laundering: ED was ‘investigating several cases related to cryptocurrency frauds wherein a few crypto exchanges had been found involved in money laundering’.
Steps taken in India
- Application of PLMA: The Government placed all transactions involving virtual digital assets under the purview of the Prevention of Money Laundering Act (PMLA).
- Introduction of a tax regime: Government has introduced the tax regime for the virtual digital assets in previous year’s Budget.
- Draft legislation: Government has formulated the draft legislation seeks to prohibit mining, holding, selling, trade, issuance, disposal or use of cryptocurrency in the country.
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