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The Indian government has brought crypto exchanges under the purview of the Prevention of Money Laundering Act (PMLA). The Ministry of State for Finance, Pankaj Chaudhary, recently announced that anti-money laundering (AML) guidelines are now applicable to offshore crypto exchanges catering to the Indian market.
This development marks a crucial step in enhancing transparency and curbing illicit financial activities within the cryptocurrency sector. The move aligns with global efforts to regulate the digital asset space and mitigate the risks associated with money laundering and other financial crimes.
As of March, crypto exchanges operating in India are classified as reporting entities under the PMLA. This means that they are obligated to adhere to stringent AML guidelines, ensuring compliance with regulatory standards. One of the key requirements for these reporting entities is the maintenance of Know Your Customer (KYC) details, a standard practice in traditional financial institutions.
Pankaj Chaudhary, responding to a query in the Lok Sabha, confirmed that the AML guidelines and reporting requirements are not limited to domestic exchanges alone. Offshore crypto exchanges servicing the Indian market are also subject to these regulations. The minister further disclosed that 28 crypto exchanges or virtual digital asset service providers have already registered with the Financial Intelligence Unit–India.
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Among the registered entities are prominent names in the Indian cryptocurrency space, including CoinX, Unocoin, Bitbns, Zebpay, WazirX, Coinswitch, CoinswitchX, and Rario. The registration process for these Virtual Digital Asset Service Providers (VDA SPs) has been initiated, reflecting the government’s commitment to establishing a comprehensive regulatory framework for the crypto industry.
This move is expected to bring greater accountability to the crypto ecosystem, fostering investor confidence and mitigating concerns related to the misuse of digital assets for illicit activities. The inclusion of offshore exchanges servicing the Indian market in these regulatory measures underscores the government’s determination to address potential loopholes in the system.
As the cryptocurrency landscape continues to evolve globally, India’s proactive approach towards regulating this space reflects a broader trend of governments recognizing the importance of integrating digital assets into the broader financial framework while simultaneously safeguarding against potential risks. The journey toward comprehensive crypto regulation is ongoing, and these recent measures represent a significant stride in achieving a balanced and secure crypto environment in India.