Cryptocurrencies will now be tracked by intelligence units.
Table of Contents
The Background
The regulatory framework for cryptocurrency in India is constantly evolving and remains somewhat unclear. In 2018, the Reserve Bank of India (RBI) issued a circular that prohibited banks and financial institutions from dealing with or providing services to entities dealing in cryptocurrencies. This effectively meant that individuals and businesses were unable to buy or sell cryptocurrencies using bank accounts or credit cards.
However, in March 2020, the Supreme Court of India overturned the RBI’s ban, stating that it was unconstitutional. Since then, there has been no official ban on cryptocurrency in India, and individuals and businesses are free to trade cryptocurrencies.
However, the Indian government has not yet introduced a clear regulatory framework for cryptocurrencies, which has led to uncertainty and confusion for market participants. There have been reports that the government is considering introducing a bill that would ban all private cryptocurrencies and introduce a central bank digital currency (CBDC).
It is worth noting that while there is currently no clear legal framework for cryptocurrencies in India, individuals and businesses still need to comply with existing laws and regulations, such as tax laws, anti-money laundering (AML) and know-your-customer (KYC) regulations, and foreign exchange regulations.
The legal aspect of Cryptocurrencies
The legal status of cryptocurrencies varies greatly from country to country, and it’s an evolving and complex area of law. Here’s a general overview of the current legal status of cryptocurrencies:
Legal status: In some countries, cryptocurrencies are legal and recognized as a form of payment or investment. In others, they are completely banned or considered illegal.
Regulations: Many countries have started to regulate cryptocurrencies to prevent fraud and protect investors. This includes implementing anti-money laundering (AML) and know-your-customer (KYC) regulations.
Taxation: Cryptocurrencies are subject to taxation in many countries, but the specifics vary depending on the jurisdiction.
ICOs: Initial coin offerings (ICOs) have been largely unregulated in many countries, but some have started to regulate them as securities.
Central bank digital currencies (CBDCs): Many countries are exploring the development of CBDCs, which are digital versions of their national currencies. These are expected to be regulated like traditional currencies.
Overall, the legal status of cryptocurrencies is still in flux and varies significantly from country to country. It’s important to understand the laws and regulations in your jurisdiction before investing in or using cryptocurrencies.
Ambit of Crypto under the PMLA Act
The Prevention of Money Laundering Act (PMLA) is a law in India that aims to prevent money laundering and terrorist financing. In 2020, the Indian government proposed a bill to regulate cryptocurrencies under the PMLA.
Under the proposed bill, cryptocurrency exchanges and traders would be required to register with the government and comply with KYC and AML regulations. They would also be required to report suspicious transactions to the authorities.
Additionally, the bill proposes penalties for violations of the regulations, including fines and imprisonment. It also gives the government the power to seize cryptocurrency assets that are believed to be involved in money laundering or terrorist financing.
The proposed bill is currently being reviewed by the Indian government, and it is not yet clear what the final version will look like. However, the government is taking steps to regulate cryptocurrencies under the PMLA ambit, to prevent their use for illegal activities such as money laundering and terrorism financing.
