India Enforces AML Laws on Crypto Trading

India Regulates Crypto with AML Laws

The Indian Finance Ministry has expanded its regulatory reach over digital assets by subjecting cryptocurrency trading and related financial services to anti-money laundering (AML) laws. This move reflects a global trend where digital asset platforms are required to adhere to strict AML standards similar to those imposed on traditional financial entities like banks and stock brokers.

Response to Crypto Scandals

India's decision to enforce AML regulations on the crypto industry follows several high-profile scandals. Last year, cybercriminals demanded a ransom in cryptocurrency after hacking the All India Institute of Medical Sciences' internet server. Additionally, the Indian directorate of enforcement seized Bitcoin linked to a fraudulent gaming application known as E-nuggets, and froze funds connected to Chinese-controlled entities involved in illicit activities with the token HPZ.

Previous Regulatory Measures

Prior to this, the Indian government had already introduced a capital gains tax of 30% on cryptocurrency transactions along with a 1% tax deducted at source (TDS) on crypto trades. These measures reportedly led to a decline in interest among Indian traders on local crypto exchanges.

Aligning with Global Standards

By implementing these AML laws, India aims to curb illicit activities within its burgeoning crypto sector and align with international regulatory standards. This development marks a significant step in the country's ongoing efforts to regulate digital assets and enhance financial security.

The introduction of AML regulations is expected to enhance transparency and accountability in the crypto industry while protecting investors and maintaining market integrity.