The Indian government has disclosed that a total of 28 entities offering services related to virtual digital assets (VDAs) have successfully registered with the Financial Intelligence Unit-India (FIU-IND). Notable names among these registered entities include CoinDCX (Neblio Technologies), WazirX (Zanmai Labs), Coinswitch (Bitcipher Labs), CoinswitchX (Nextgendev Solutions), and Zebpay (Awlencan Innovations India).
This revelation comes in response to a query in the Lok Sabha, highlighting the government’s ongoing efforts to regulate the burgeoning cryptocurrency landscape in the country.
In March, the government issued a notification categorizing companies dealing with VDAs, crypto exchanges, and related intermediaries as ‘reporting entities’ under the Prevention of Money Laundering Act (PMLA). Subsequently, these entities, including crypto exchanges and their intermediaries, were mandated to conduct Know Your Customer (KYC) procedures for their clients and platform users.
Offshore crypto exchanges operating in India are also obligated to adhere to these regulatory guidelines. Minister of State for Finance Pankaj Chaudhary emphasized that the registration process for such VDA service providers catering to the Indian market has been set in motion. Non-compliance by foreign platforms may lead to appropriate action under the PMLA.
Beyond regulatory challenges, the Indian government’s taxation policies regarding VDAs, including cryptocurrencies, have stirred controversy within the crypto market. The decision to impose a 1% tax deducted at source (TDS) on crypto transactions exceeding INR 10,000, coupled with a 30% tax on profits from these transactions, has significantly impacted the crypto trade.
The Reserve Bank of India’s (RBI) vocal criticism of cryptocurrencies and calls for their potential ban have further dampened market sentiment. The recent downfall of industry giants like FTX has added to the challenges faced by India’s crypto sector, contributing to the closure of platforms such as Pillow and WeTrade this year amid the ongoing funding winter.
