Prevention of Money Laundering Act Enforces Crypto Regulation in India

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India’s PMLA amendments aim to regulate crypto transactions involving fiat and intermediaries.
Due to decentralized blockchain and anonymous transactions, India faces difficulty enforcing money laundering controls.
The country still requires a comprehensive legislative framework for virtual digital currencies and a centralized market regulator.

Regulators in India and globally have identified difficulty enforcing money laundering controls as a critical risk in the crypto ecosystem. The decentralized nature of private crypto assets or currencies makes them challenging to regulate, and the fact that the crypto ecosystem is open to more than geographical boundaries exacerbates the problem.

Transactions on a blockchain are anonymous, making transaction tracing and implementing foreign exchange controls complicated.

The recent amendments to the Prevention of Money Laundering Act 2022 (PMLA) seek to use two regulatory touchpoints within the crypto ecosystem to enforce and implement the regulation. These touch points are when a crypto asset is converted to fiat currency and the functioning of intermediaries.

The set of transactions that have been brought under…

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