India’s crypto companies are given ‘reporting entities’ status like banks

While the Indian government and central bank have criticized the crypto market, they are working to bring some regulatory clarity.

Earlier today, the Indian Ministry of Finance issued a notice that crypto and NFT companies will be treated as “reporting entities” under the Prevention of Money-Laundering Act (PMLA). this means that crypto companies operating in India must comply with similar reporting standards and KYC standards as followed by other players such as banks, payment system operators, securities brokers, etc.

As a result, KYC standards will not only be a best practice for crypto companies, but rather a legal obligation. All crypto companies in India will therefore have to report the legal status of suspicious transactions to the Financial Intelligence Unit (FIU).

This is a welcome development given that the Indian central bank was at one point considering a full ban on crypto. At the G20 meeting last month in Bengaluru, India, Finance Minister Nirmala Sitharaman spoke about reaching common ground for a crypto regulatory framework among all G20 countries.

“We are talking to all countries if all countries can achieve a standard operating procedure that will be effective while following a regulatory framework. It is being discussed with the G20 countries,” she said.

However, the Treasury Department did not provide any form of crypto tax easing during this year’s budget session.

Crypto industry players in India are expanding support

Players in the crypto industry in India have shown their willingness to cooperate with regulators while expanding their support on the matter. CoinCDX co-founder Sumit Gupta said:

“Slowly but surely we are moving towards a regulated crypto ecosystem! Entities like CoinDCX are now required by law to conduct due diligence and enhanced due diligence under the PMLA. We, at CoinDCX, are committed to fighting money laundering and terrorist financing. We’ve been voluntarily implementing this compliance for some time now, but we’re pleased to see it’s now enshrined in law.”

He further added that they are looking for a way to share data with the FIU-IND for a while. However, this new law will open up this data sharing channel. Sumit said CoinCDX will continue to work with regulators and policymakers to bring more clarity.

Technology attorney Jaideep Reddy said: “Happy to say that we had already made this recommendation in December 2018 (excerpt attached) and the notification falls exactly under the proposed provision”.