On March 7th, the Finance Ministry of India announced its decision to include cryptocurrencies and other VDA (Virtual Digital Assets) under the Prevention of Money Laundering Act (PMLA).
Before you panic, if you’re an investor, know that this law only gives you additional protection and is not a cause for concern by any means. However, let us explain to you what exactly this update means and what its implications are.
What Does this Regulation Cover?
In its gazette notification, the Finance Ministry specified the nature of transactions, among other things, that would fall under this anti-money laundering law.
- The exchange between virtual digital assets (VDAs) and fiat currencies.
- Exchange between one or more forms of virtual digital assets.
- Transfer of virtual digital assets.
Other activities that fall under the umbrella of this money laundering law are:
- The safekeeping or administration of virtual digital assets
- Participation in financial services related to the offer and sale of virtual digital assets.
This essentially means that exchanges, custodians, and wallet providers, among other crypto-related entities, will now fall under the PMLA. The notification also mentioned that the government will now consider all entities dealing in VDA as reporting entities.
What Does This Mean for Investors?
The inclusion of virtual digital assets in the PMLA will work towards protecting cryptocurrency users in the country. Crypto transactions will be strictly monitored. And the Enforcement Directorate will be investigating any financial wrongdoing involving crypto assets. Crypto firms will ensure the execution of this law and protect the interests of their users. This does not impact compliant retail investors that are trading/investing in cryptocurrencies. They can continue to transact in cryptocurrencies as they have been doing.
What Does This Mean for Crypto Firms?
All digital asset platforms must now take anti-money laundering measures on the same scale as regulated entities like banks or stock brokers. Crypto entities dealing in VDAs will now mandatorily have to perform KYC for the users on their platforms. Apart from this, exchanges must also report any suspicious activity to the Financial Intelligence Unit India.
And since the notification included that the government will now consider these firms reporting entities, the law requires them to diligently maintain a record of all transactions for at least five years. Moreover, any transaction exceeding ₹10 lakhs, either as a lump sum or as a monthly aggregate, must be recorded separately.
What Changes at Mudrex?
To put it simply, nothing. The new rules are introduced to prevent the misuse of cryptocurrencies. And they do not stop the KYC-verified users on Mudrex from investing in crypto assets in any way.
At Mudrex, we have always prioritized the investors’ funds and have been fully compliant since day one. Like in the past, we will continue to maintain an authentic record of all trades and transactions. This move has only solidified our belief that the government introducing full-fledged crypto regulations is only a matter of when and not if.
Does This Change the Mudrex Investor Experience?
Not at all. Mudrex will continue doing what it has always done – provide a seamless user experience to facilitate your crypto investments.
We see this as a step in the right direction. This move shows that the government recognizes digital assets as a growing asset class and has acknowledged the need for regulations. Moreover, it will definitely help prevent digital assets from being misused by bad actors. And the positive results from this move will likely prompt the government to introduce more regulations in the space and encourage a larger audience to consider investing in digital assets. Building trust is essential for the large-scale adoption of cryptocurrencies and other digital assets, and hopefully, this acts as another catalyst for that.