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Finance Ministry’s March Directive Spurs Compliance Surge in Cryptocurrency Sector
- 28 virtual digital asset providers register with India’s Financial Intelligence Unit (FIU) following the Finance Ministry’s mandate in March.
- Mandate underscores adherence to the Prevention of Money Laundering Act (PMLA) and reinforces Know Your Customer (KYC) verification processes.
- Stringent guidelines extend to offshore platforms servicing the Indian market, with major exchanges like CoinDCX, WaxirX, and CoinSwitch leading the compliance charge.
In March, India’s Finance Ministry implemented a pivotal policy requiring crypto businesses to register with the Financial Intelligence Unit (FIU). The regulatory move aimed at enhancing oversight and transparency within the cryptocurrency sector. As of now, reports have shown that a total of 28 service providers have dutifully complied with this mandate, signaling a significant step towards formalizing the industry.
The Mandate and Compliance
India’s Finance Ministry, in a directive issued this March, mandated the compulsory registration of crypto businesses with the Financial Intelligence Unit (FIU). This move falls under the broader framework of the Prevention of Money Laundering Act (PMLA), signifying a deliberate effort to curb illicit financial activities within the cryptocurrency domain.
Furthermore, the mandate includes rigorous verification processes such as Know Your Customer (KYC), reinforcing the government’s commitment to robust regulatory standards. According to Pankaj Chaudhary, the Indian Minister of State for Finance, these measures are crucial in fostering a secure and compliant crypto ecosystem.
Also Read: 11% of VC Investments in Crypto in 2023 Went to Hong Kong and Singapore-Based Firms: Report
Offshore Platforms and Compliance Measures
The regulatory net cast by India’s Finance Ministry extends beyond domestic borders, encompassing offshore crypto exchanges servicing the Indian market. Under the recent guidelines, these offshore platforms are obligated to adhere to the same stringent reporting requirements imposed on their domestic counterparts.
Non-compliance with these regulations invokes the provisions of the Prevention of Money Laundering Act (PMLA), triggering appropriate actions against the offshore entities. Notably, major exchanges like CoinDCX, WaxirX, and CoinSwitch have proactively registered with the FIU, signaling their commitment to compliance. It’s worth noting that among the 28 registered entities, none appear to be offshore companies, underlining the swift response of the industry to the regulatory landscape.
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