According to a government statement published Tuesday, in its latest move to try and enact more control over the cryptocurrency sector the Indian government has placed the trading of cryptocurrencies under the control of governmental money-laundering regulations,
The new rules now mean that a whole range of cryptocurrency transactions, including the exchange, transfer, safekeeping, and administration of digital assets will now be governed by the Prevention of Money Laundering Act (PMLA), according to the release from the Ministry of Finance, which was published by the Gazette of India
Under the PMLA financial institutions must maintain records of all transactions for ten years, verify the identity of clients, and provide the records to officials when necessary.
India was found to have the highest number of crypto-owners in the world in 2021. However in 2022, the government imposed a new tax regime on both holdings and transfers, as well as a host of other measures, all of which together triggered a massive slump in trading, as well as a surge in outflows of investors.
The government has not yet finalized the legislation. Meanwhile, likening cryptocurrencies to fraudulent investment scams, the Indian central bank has called for them to be fully banned,
Prime Minister Narendra Modi warned last year that cryptocurrencies could “spoil our youth” if they wound up “in the wrong hands.” He also warned that “private currencies” could pose a security risk, since they could be used to fund terrorism.
Meanwhile New Delhi is looking to launch its own digital currency soon.
Globally governments have grown increasingly concerned with the unregulated nature of cryptocurrencies as their popularity has grown. Given the ability of anonymous individuals to conduct transactions with no government oversight, they have become the target of a mixture of concerns over their misuse, to finance criminal activities beyond government control, and fears over the loss of governmental power and authority such anonymous transactions produce.
