Although the Indian government and central bank have been critical of the crypto market, they are working to bring some regulatory clarity to the matter.
Earlier today, India’s Ministry of Finance issued a notification that crypto and NFT businesses shall be treated as ‘reporting entities’ under the Prevention of Money-Laundering Act (PMLA). this means that crypto firms operating in India will have to meet similar reporting standards and KYC norms as followed by other players like banks, payments system operators, securities intermediaries, etc.
As a result, KYC norms won’t be just a best practice for crypto firms, but rather a legal obligation. Thus, all crypto businesses in India will have to report the legal status of any suspicious transactions to the Financial Intelligence Unit (FIU).
This is a welcome development considering that the Indian central bank was mulling a complete ban on crypto at one point in time. During the G20 meeting last month in Bengaluru, India, finance minister Nirmala Sitharaman talked about attaining common grounds for a crypto regulatory framework among all the G20 nations.
“We are talking to all countries if all the countries can achieve a standard operating procedure that will be effective while following a regulatory framework. It’s under discussion with G20 nations,” she said.
However, the finance ministry hasn’t given any kind of relaxation on crypto taxes during this year’s budget session.
India’s Crypto Industry Players Extend Support
India’s crypto industry players have shown their willingness to cooperate with regulators while extending their support in the matter. CoinCDX co-founder Sumit Gupta said:
“Slowly but surely, we are moving towards a regulated crypto ecosystem! Entities such as CoinDCX are now required by law to conduct due diligence and enhanced due diligence under the PMLA. We, at CoinDCX are committed to combating money laundering and terror financing. We have been voluntarily conducting these compliances for a while now, but happy to see that this has now been made into law”.
He further added that they are looking for a way to share data with FIU-IND for a while. However, this new law will open this data-sharing channel. Sumit said that CoinCDX will continue to work with regulators and policymakers to bring more clarity ahead.
Technology lawyer Jaideep Reddy said: “Happy to say we had made this recommendation as far back as Dec 2018 (snippet attached), and the notification has come exactly under the suggested provision”.