Why Modi government wants these virtual digital asset platforms removed
What's the story
The Indian government has ordered the removal of 15 virtual digital asset (VDA) platforms for violating anti-money laundering laws. The Finance Ministry announced the decision today, stating that these platforms were illegally operating in India without complying with the relevant provisions of the Prevention of Money Laundering Act (PMLA), 2002. The action was initiated by FIU-India's Director against Weex, Blofin, Rezorex, Bitunix, among others.
Legal action
Notices served to entities under PMLA
Notices were served to the 15 entities under Section 13 of the PMLA, 2002.
The ministry also issued separate notices for the removal of their apps and websites from public access.
This move comes as part of a larger effort to ensure compliance with anti-money laundering regulations in India, particularly for platforms dealing with virtual digital assets like cryptocurrencies.
Regulatory framework
Virtual Digital Asset Service Providers
The entities targeted fall under the category of Virtual Digital Asset Service Providers, which have been under the anti-money laundering and counter-financing of terrorism framework since March 2023.
Under this framework, service providers engaged in certain activities in India must register with FIU-India as reporting entities and fulfill obligations under PMLA.
These activities include exchanging virtual digital assets for fiat currencies, transferring them, or providing custody/administration services for such assets.
Global impact
Compliance obligations for service providers
The compliance obligations under this framework apply to both offshore and domestic service providers operating in India. "These obligations are activity-based and are not contingent on physical presence of the entity in India," the statement said.
Cautionary note
Government warns on crypto products, NFTs
Along with the action against these 15 platforms, the government also reiterated its warning on crypto products and non-fungible tokens (NFTs).
The ministry said, "Crypto products and NFTs are unregulated and can be highly risky." It also added that "there may be no regulatory recourse for any loss from such transactions."
This serves as a reminder of the potential risks associated with investing in cryptocurrencies and digital assets.