The Indian government has implemented anti-money laundering (AML) standards on cryptocurrency transactions, as announced in a notification published in The Gazette of India on March 7.
The notification subjects a range of cryptocurrency transactions to the Prevention of Money-Laundering Act (PLMA) 2002, which includes exchange, transfers, safekeeping, and administration of virtual assets. It also includes financial services related to an issuer’s offer and sale of virtual assets.
This notification follows the Indian government’s amendment of tax rules in March 2022, which imposed a 30% tax on digital assets holdings and transfers. This led to crypto traders moving to offshore exchanges and new crypto projects relocating outside India. The trading volume on major cryptocurrency exchanges across India dropped by 70% within ten days of the new tax policy and almost 90% over the next three months.
Despite the tough stance, India’s Finance Minister, Nirmala Sitharaman, has urged international efforts to regulate crypto in 2023. During India’s first presidency of the G20, she called for a coordinated effort “for building and understanding the macro-financial implications,” which could be used to reform crypto regulation globally.
The move reflects a wider global trend of regulators tightening AML standards for crypto to curb illicit activities and promote greater transparency in the industry.