{"id":230616,"date":"2023-03-11T20:13:05","date_gmt":"2023-03-11T14:43:05","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=230616"},"modified":"2023-03-11T20:13:05","modified_gmt":"2023-03-11T14:43:05","slug":"crypto-under-pmla-new-rules-of-the-game","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/crypto-under-pmla-new-rules-of-the-game\/","title":{"rendered":"Crypto under PMLA: New rules of the game"},"content":{"rendered":"\n

Source<\/strong>– The post is based on the article \u201cBelated, but essential\u201d <\/strong>published in \u201cThe Hindu\u201d <\/strong>and Crypto under PMLA: New rules of the game\u201d <\/strong>published in \u201cThe Indian Express\u201d<\/strong> and \u201cGoI Is Less Cryptic” <\/strong>published in \u201cThe Times of India\u201d <\/strong>on 11th March 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS3- Indian economy<\/p>\n

Relevance<\/strong>– Issues related to financial and banking system<\/p>\n

News<\/strong>– The government has mandated that a host of trading activities in crypto assets will now come under the ambit of the Prevention of Money Laundering Act.<\/p>\n

What are some major points related to government decisions?<\/strong><\/h2>\n

Trading between cryptocurrencies and fiat currencies or among cryptocurrencies<\/strong> and other such services can be investigated by agencies such as the Enforcement Directorate (ED) and the Income Tax department.<\/p>\n

It puts the onus of ascertaining the provenance<\/strong> of all activity in such assets upon individuals and businesses participating in or facilitating these transactions.<\/p>\n

What has been the approach of the Indian government on virtual currencies?<\/strong><\/h2>\n

The government has decided to not accept cryptocurrencies as \u201ccurrencies\u201d. It treats them as virtual digital assets.<\/strong><\/p>\n

India\u2019s regulatory framework <\/strong>is consistently evolving <\/strong>for crypto assets.<\/p>\n

Prior to Parliament\u2019s winter session of 2021, GoI indicated that a bill to regulate crypto assets <\/strong>would be tabled. However, a bill was never introduced.<\/p>\n

In April 2022, the government introduced a 30% income tax on gains<\/strong> made from cryptocurrencies.<\/p>\n

In July 2022, the government brought in rules regarding 1% tax deducted at source<\/strong> on cryptocurrency.<\/p>\n

GoI also acknowledges the limitation of having a standalone domestic regulation<\/strong> for virtual assets. In February, GoI informed Parliament that crypto assets are not confined by national boundaries. <\/strong><\/p>\n

Regulation will be effective only if there\u2019s international collaboration<\/strong> on evolving a common regulatory framework.<\/strong> Therefore, India is utilising the G20 platform<\/strong> to catalyse a common framework.<\/strong><\/p>\n

RBI has consistently advocated for a ban on virtual currencies<\/strong>. It had asked financial intermediaries it regulates to follow KYC norms<\/strong> and other relevant standards for remittances following transactions in crypto assets.<\/p>\n

What are the challenges associated with virtual currencies?<\/strong><\/h2>\n

They are designed to bypass the financial system and existing regulation<\/strong>. Their anonymous character<\/strong> makes them effective. But these characteristics also throw up several risks for any economy.<\/p>\n

Due to absence of regulation, they can evade minimum prudential norms such as Know-Your-Customer regimes, Anti-Money Laundering and Combating the Financing of Terrorism (CFT) rules <\/strong>etc.<\/p>\n

There is the question of monetary sovereignt<\/strong>y. These private currencies are often pegged to the US dollar.<\/strong> They can replace the Indian rupee and lead to greater \u201cdollarisation\u201d of the Indian economy<\/strong> even as the monetary and fiscal authorities lose control.<\/p>\n

FATF has been continuously flagging the potential that virtual digital assets have for criminal misuse <\/strong>due to their speed and anonymity. <\/strong><\/p>\n

A few countries have moved to regulate virtual assets, and some others have banned them outright, while a majority have not taken any action. It has created a global system with loopholes for criminals and terrorists<\/strong>.<\/p>\n

Why should the Indian government be proactive in dealing with virtual currencies?<\/strong><\/h2>\n

Volume of trade in unregulated virtual assets<\/strong> has grown significantly in recent years.<\/p>\n

The Enforcement Directorate<\/strong> is investigating several cases related to cryptocurrency frauds wherein a few crypto exchanges<\/strong> had been found involved in money laundering. \u20b9936 crore <\/strong>had been attached or frozen as on January 31 for linkages with proceeds of crime.<\/p>\n

A July 2021 online report by BrokerChooser.com<\/strong> had estimated India as being the country with the highest number of \u2018crypto owners\u2019, at 10.07 crore<\/strong>. It was more than threefold the number of owners of crypto assets in the second ranked U.S.<\/p>\n

What should be the approach of the Indian government towards virtual currencies?<\/strong><\/h2>\n

The government must at the earliest decide on a full-time regulator<\/strong> for this sector and not leave entities trading in cryptocurrencies at the mercy of investigative agencies<\/strong> alone.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source– The post is based on the article \u201cBelated, but essential\u201d published in \u201cThe Hindu\u201d and Crypto under PMLA: New rules of the game\u201d published in \u201cThe Indian Express\u201d and \u201cGoI Is Less Cryptic” published in \u201cThe Times of India\u201d on 11th March 2023. Syllabus: GS3- Indian economy Relevance– Issues related to financial and banking… Continue reading Crypto under PMLA: New rules of the game<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10496],"class_list":["post-230616","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-times-of-india","entry"],"jetpack_featured_media_url":"","views":{"total":6,"cached_at":"","cached_date":1700118118},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/230616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=230616"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/230616\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=230616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=230616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=230616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}