Mar 08, 2023

India Enforces AML Standards on Crypto Businesses

The Indian government has recently issued a notification, subjecting a range of crypto transactions to the Prevention of Money-Laundering Act (PMLA) 2002. This includes the exchange, transfers, safekeeping and administration of virtual assets, as well as financial services related to an issuer’s offer and sale of virtual assets.

The notification requires all financial institutions to maintain a record of all transactions for the last ten years, provide these records to officials if demanded, and verify the identity of all the clients. This is a step in the right direction for regulating the crypto industry in India, as it will ensure all crypto businesses must perform necessary KYC, transaction monitoring etc as part of their process.

The notification comes as regulators worldwide are tightening Anti-Money Laundering (AML) standards for crypto, and it has already had a significant impact on the Indian crypto market. Trading volume on major cryptocurrency exchanges across India dropped by 70% within 10 days of the new tax policy, and almost 90% over the next three months. This has driven crypto traders to offshore exchanges and forced budding crypto projects to move outside India.

As a result of all this, in February 2023, Indian authorities issued a preemptive ban on crypto advertising and sponsorships in the local women’s cricket league, following a previous ban for the men’s cricket Premier League, introduced back in 2022.

India’s Finance Minister, Nirmala Sitharaman, is calling for a coordinated effort to regulate crypto on a global level. She believes this could be used to reform crypto regulation worldwide, and has urged international efforts to build and understand the macro-financial implications of crypto.

The notification from the Ministry of Finance is a sign that India is taking steps to ensure that crypto businesses are operating within the law. This will be beneficial to businesses in the long run, as it will create a safe and secure environment for them to operate in.

Furthermore, the notification could pave the way for businesses to take advantage of the opportunities that the web3 space has to offer. This includes the promotion and sale of NFTs, as well as the use of NFT marketing agencies and web3 agencies to help businesses reach their target audience.

By introducing AML standards for crypto, India is setting an example for other countries to follow. This will help create a more secure and stable environment for crypto businesses to operate in, and will also help businesses to better protect their customers and their assets.

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