In a new regulatory move, the Indian government has bought a range of virtual digital asset (VDA) transactions under the ambit of Prevention of Money Laundering Act (PMLA) 2002. 

The Finance Ministry, in a gazette notification, said the exchange between virtual digital assets and fiat currencies; 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 participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset will fall under the purview of the PMLA Act. 

The notification further said that VDAs shall have the same meaning assigned to it in Clause (47A) of Section 2 of the Income-Tax Act 1961 (43 of 1961).

Crypto custodians and exchanges are now included in the definition of person carrying out designated business, thereby giving such exchanges and custodians equal responsibilities like banks under PMLA, said Mohnish Wadhwa, CEO of a business consulting firm, CapDeck Advisors. 

Following the release of the notification, the crypto industry has lauded the move. Ashish Singhal, co-founder of Coinswitch, in a tweet, said: “The notification to bring VDA transactions under PMLA is a positive step in recognising the sector. This will strengthen our collective efforts to prevent VDAs from being misused by bad actors.” 

Similarly, Nischal Shetty, founder of WazirX, in a tweet, said it is a good step towards regulating the crypto industry in India. “This also ensures all crypto businesses must perform necessary KYC, transaction monitoring, as a part of their process,” he added. 

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