The Centre has brought crypto trading, safekeeping and related financial services under the ambit of the Prevention of Money Laundering Act. The Union finance ministry issued a gazette notification to this effect.
Crypto exchanges and intermediaries dealing with virtual digital assets (VDA) will now be required to perform KYC of their clients and users of the platform. Besides, exchanges will have to report suspicious activity to the Financial Intelligence Unit India.
The notification states that organisations dealing in VDA will be regarded as "reporting entities" under PMLA; currently, "reporting entities" include banks, financial institutions, companies active in the real estate and jewellery sectors, as well as casinos. Every reporting entity is required by this legislation to keep a record of every transaction.
In accordance with a gazette notification, "exchange between virtual digital assets and fiat currencies, exchange between one or more types of virtual digital assets, transfer of virtual digital assets (VDA), safekeeping or administration of virtual digital assets or tools enabling control over virtual digital assets, participation in and provision of financial services related to an issuer's offer and sale of a virtual digital asset" are now all covered.