When the government decided to tax proceeds from crypto trading last year, it didn't issue any clarity on the legality of the virtual asset. The Reserve Bank of India has been calling for a ban against it, with Governor Shaktikanta Das comparing investment in crypto to gambling. After staying silent on the issue during Union Budget 2023, the Finance Ministry has brought cryptocurrencies under the ambit of India's anti-money laundering law.
Tightening screws on the blockchain
The ministry has warned people against participating in and providing financial services for the offer and sale of virtual assets. This means crypto transactions will be monitored under the Prevention of Money Laundering Act. The Income Tax Act categorises codes or tokens generated via cryptography on the blockchain as a virtual asset, which the ministry has warned about.
Clarity brings crypto out of murky waters
The Enforcement Directorate, which is already probing CoinSwitch Kuber and Wazir X exchanges in India, will also be able to investigate crypto trading. With this, cryptocurrencies will cease to exist in a grey area, and now firms facilitating crypto transactions will have to comply with anti-money laundering norms like stock brokers and banks.
After RBI Governor Das called the value of crypto based on make believe, the central bank has also launched its own digital currency, which can be used for transactions but isn't an investment vehicle like Bitcoin or Ethereum.