The government has stated that all forms of cryptocurrency operations, including trading, safekeeping, and associated financial services, would now fall under the Prevention of Money-Laundering Act, 2002, in an effort to tighten laws on cryptocurrencies in the nation.
The finance ministry’s department of revenue announced in a notification that the aforementioned Act would apply to all exchanges involving virtual digital assets and fiat money, exchanges involving one or more types of virtual digital assets, and transfers of digital assets.
The participation in and provision of financial services relating to an issuer’s offer and sale of a virtual digital asset, as well as the safekeeping or administration of virtual digital assets that enable control over virtual digital assets, will also be covered under the same law.
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Although it has taken certain steps to reduce cryptocurrency usage for unlawful purposes, the Centre has not yet developed complete legislation on the subject. With the recent change, law enforcement authorities will have more authority to combat money laundering through cryptocurrency channels.
In the Union Budget 2022, the government had previously declared a 30% tax on cryptocurrencies. Additionally, it said that 1% TDS would be retained each time an investor sells a virtual digital asset above a predetermined limit.