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India Imposes Anti-Money Laundering Law On Cryptocurrency Transactions


Given the increasing rate of crypto-related money laundering, regulators in different countries have become bullish on anti-money laundering law enforcement.

A recent report revealed that India’s Ministry of Finance subjected crypto transactions to the national Anti-money laundering law.

According to the March 7 report, the ministry all crypto-related financial services providers to comply with the Prevention of Money Laundering Act (PLMA) 2022.

The crypto transactions listed in the notification include exchange, transfers, safekeeping, and administration of virtual assets.

Indian Crypto Services Providers Must Now Comply With AML Rules

In detail, the Indian Ministry of Finance mandated all financial institutions under the provisions of the PLMA to keep records of all crypto transactions for ten years.

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The institutions or service providers must provide the information whenever the authorities demand and verify the clients’ identities.

This development comes as global regulators tighten anti-money laundering guidelines for cryptocurrencies.

This notification will complicate the operation of crypto firms in India as they have faced difficulties in recent years.

The Indian government has not been the least lenient with crypto-related firms.

The government dropped stringent policies like the March 2022 tax law amendment, subjecting digital asset holdings and transfers to 30% tax.

At the time, the trading volume of top cryptocurrency exchanges in India plummeted by 70% within ten days of the new tax policy announcement.

The decline in trading volume continued reaching 90% in three months.

This stringent tax law repelled several crypto exchanges from India and forced startup crypto projects to relocate outside the country.

In February 2023, Indian authorities, in an attempt to showcase their hawkish stance on crypto, banned crypto advertising and sponsorships in the local women’s cricket league.

This move came after a ban on the crypto advert and sponsorship in the men’s cricket Premier League in 2022.

The Indian government has repeatedly demonstrated its tough stance on cryptocurrency.

For instance, earlier in 2023, while celebrating India’s first G20 presidency, the Finance Minister, Nirmala Sitharaman, called for international cooperation in regulating crypto.

She urged global regulators to make coordinated efforts in building and understanding the micro-financial implications of digital assets.

The minister noted that a collaborative effort could help in global crypto regulatory reforms.

Crypto Regulations Could Intensify In 2023, As Regulators Raise Concerns Over Crypto Risks

Reports have shown that crypto regulations will reach new heights in 2023, with global regulators expanding their focus on several classes of digital assets, including stablecoins.

Stablecoins oversight has become an object of debate among regulators and many crypto industry players.

Some governments and central banks are concerned about the possible impact of this class of digital assets on their fiat economy.

Both the International Monetary Fund (IMF) and the European Central Bank published articles detailing the risk of stablecoins and their concerns over potential contagion.

They also called for global authorities to devise a bespoke regulatory framework for stablecoins.

Recently, Hong Kong’s central bank published a report detailing its assessment of asset-backed stablecoins.

In the report, the Hong Kong Monetary Authority (HKMA) highlighted the risks of mismatch and liquidity that could negatively impact stablecoin stability during fire-sale events.

The HKMA, in its report, placed a ban on algorithm stablecoins transactions, citing the Terra collapse as a trigger factor.

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