Mohith Agadi
Government of India has announced a new notification under the Prevention of Money-laundering Act, 2002 (PMLA). The notification, issued by the Ministry of Finance, Department of Revenue, on March 7, 2023, states that certain activities related to virtual digital assets will be considered as business activities for the purposes of the Act.
The notification lists five activities that will be considered as business activities under sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the PMLA. These activities include the exchange between virtual digital assets and fiat currencies, the exchange between one or more forms of virtual digital assets, the transfer of virtual digital assets, the safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.
The notification further clarifies that “virtual digital asset” shall have the same meaning assigned to it in clause (47A) of section 2 of the Income-tax Act, 1961 (43 of 1961).
The notification is aimed at regulating the use of virtual digital assets in business activities and preventing money laundering through such assets. With the rise of cryptocurrencies and other virtual digital assets, the government is taking steps to ensure that they are used in a responsible and legal manner.
The notification will have implications for businesses involved in virtual digital asset transactions, and they will need to ensure compliance with the PMLA regulations. The government has also set up a task force to monitor the use of virtual digital assets and prevent any illegal activities related to them.
Overall, the government’s notification is a significant step in regulating the use of virtual digital assets in business activities and ensuring that they are not misused for illegal purposes. It is expected to have a positive impact on the Indian economy by promoting transparency and preventing money laundering.
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Damodar Kalyan
