- India’s PMLA amendments seek to regulate crypto transactions involving fiat and intermediaries.
- Due to decentralized blockchain technology and anonymous transactions, India confronts difficulty enforcing money laundering controls.
- The nation still requires a thorough legislative framework for virtual digital currencies and a centralized market regulator.
Regulators in India and around the globe have identified difficulty enforcing money laundering controls as a major risk in the crypto world. The decentralized nature of private crypto assets or currencies makes them hard to control, and the fact that the crypto environment is open to more than geographical borders intensifies the problem.
Transactions on a blockchain are anonymous, making transaction tracing and enforcing foreign exchange controls complicated.
The recent amendments to the Prevention of Money Laundering Act 2022 (PMLA) attempt to use two regulatory touchpoints within the crypto ecosystem to enforce and implement the regulation. These touch points occur when a crypto asset is converted to fiat currency and the functioning of intermediaries.
The set of transactions that have been incorporated into the scope of the PMLA include the exchange between virtual digital assets and fiat currencies, the exchange between one or more forms of virtual digital assets, the 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.
The exchange of virtual digital assets and fiat currencies, the exchange of one or more forms of virtual digital assets, the transfer of virtual digital assets, the 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 are among the transactions brought under the scope of the PMLA.
The amendments to the PMLA will play a significant role in fraud control and bolster the trust of investors, retail consumers, and financial markets in the crypto economy. They align the Indian legal structure with global efforts to regulate trading in crypto assets, but they do not legitimize or legalize private cryptocurrencies. There is still a requirement for a comprehensive legislative framework for virtual digital currencies, which should ideally provide for a market regulator for the crypto ecosystem and a need to regulate intermediaries.
Get The News You Want
Read market moving news with a personalized feed of stocks you care about.
Get The App
As these regulations are implemented and enforced, it may show financial regulators that effective regulation of transactions in private crypto assets is achievable, and a ban is not necessary. Bringing transactions in virtual digital assets within the scope of the PMLA also aligns with the need for a globally coordinated effort to effectively regulate the crypto environment, which spans across sovereign borders.
The post Prevention of Money Laundering Act Implements Crypto Regulation in India appeared first on Coin Edition.
See original on CoinEdition
