The government previously levied more stringent tax rules on the crypto sector, including applying a levy on trading in 2022.
Stringent tax rules and a global rout in digital assets caused a plunge in domestic trading volumes
Photo Credit: Unsplash
India's money laundering laws will apply to trade in cryptocurrencies, the federal government said in a notification dated March 7.
The exchange between virtual digital assets and fiat currencies, the exchange between one or more forms of virtual digital assets and the transfer of digital assets will be covered under money laundering laws, the notification said.
The safekeeping or administration of virtual digital assets and the participation in financial services related to the offer and sale of virtual digital assets will also be covered, the notification added.
India is yet to finalise legislation and regulations surrounding cryptocurrencies even as the country's central bank has cautioned against their use multiple times.
The Reserve Bank of India has said that cryptocurrencies should be banned as they are akin to a Ponzi scheme.
Extending India's money laundering rules to cryptocurrencies will give authorities greater authority in monitoring the transfer of these assets beyond the country's borders.
The Narendra Modi-led administration, as part of its leadership of the G-20 forum, has been pushing for a wider global agreement on dealing with the risks brought on by cryptocurrencies.
© Thomson Reuters 2023
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