Crypto Now Under Money Laundering Act in India, Trading Platforms to Perform KYC

The Finance Ministry has announced that crypto trading, safekeeping, and other related financial services are now under the Prevention of Money Laundering Act. This means organizations dealing with Vertigo3d | iStock | Getty Images(VDA) such as crypto will be required to perform KYC on their clients.

The central government has taken another step towards regulating digital assets and brought crypto trading, safekeeping, and other services under the bounds of the Prevention of Money Laundering Act. Moving forward, intermediaries dealing with VDAs and crypto exchanges will need to perform KYC of their clients as well as users of their platform. They will also be required to report suspicious activity to the Financial Intelligence Unit India.

The announcement also states that the entities dealing in VDAs will be categorized under “reporting entities” which means they will be required to maintain a record of all the transactions.

This move is to ensure that digital-asset platforms follow anti-money laundering standards that are similar to regulated currency. The government can shut down or penalize entities that don’t comply.

RBI, on the other hand, is in opposition to cryptocurrency as it believes that this digital currency poses a risk to financial stability. To counter crypto, RBI launched its own currency called the digital rupee, the announcement for which was made in December last year.

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