Govt notifies Exchange and Transfer of Virtual Digital Assets to be Regulated by PMLA [Read Notification]

The Central Government has notified in the official gazette that the exchange and transfer of Virtual Digital Assets (VDA) will be regulated under the Prevention of Money Laundering Act.

The Official Gazette Notification states that “In exercise of the powers conferred by sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003) (hereinafter referred to the as the Act), the Central Government hereby notifies that the following activities when carried out for or on behalf of another natural or legal person in the course of business as an activity for the purposes of said sub sub-clause, namely:-

(i) exchange between virtual digital assets and fiat currencies;

(ii) exchange between one or more forms of virtual digital assets;

(iii) transfer of virtual digital assets;

(iv) safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets; and

(v) participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.

Explanation:- For the purposes of this notification “virtual digital asset” shall have the same meaning assigned to it in clause (47A) of section 2 of the Income tax Act, 1961 (43 of 1961).”

Section 2 of the Income Tax Act had been amended earlier to include clause 47A, which defines the term "Virtual Digital Asset" to mean any digital representation of value, generated through cryptographic means or otherwise, that is used for financial transactions, investments, or as a store of value or unit of account. This includes cryptocurrencies, NFTs, and any other digital assets specified by the Central Government. The definition specifically excludes subscriptions to OTT platforms, mobile applications, and e-commerce platforms.

The Central Government has the power to exclude any digital asset from this definition, subject to specified conditions, and may also exclude India's first digital currency or CBDC through notification in the Official Gazette.

To Read the full text of the Order CLICK HERE

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