Virtual Digital Assets and crypto channels are emerging routes for money laundering. Discuss India’s regulatory response and the Crypto Asset Reporting Framework roadmap.
Subtopic: Security · Money laundering
How to structure your answer
Introduction: MoF notification 7 March 2023 brought VDAs under PMLA; CBDT levies 30% tax + 1% TDS (Finance Act 2022); India committed to OECD Crypto Asset Reporting Framework with first exchange of information by 2027.
Body: 1) PMLA coverage — FIU-IND registration of crypto exchanges; KYC, STR obligations. 2) Show-cause to offshore exchanges 2023-24 (Binance, KuCoin etc.). 3) Gap — no comprehensive legislative framework; G20 IMF-FSB synthesis paper guidance.
Way forward: Pass Crypto-asset Regulation Bill; operationalise CARF; license-based regime via IFSCA at GIFT City; investor-protection rules.
Written within the word limit
143 words · target 150 words · 9 min
Introduction: A Ministry of Finance notification of 7 March 2023 brought Virtual Digital Assets under the PMLA reporting regime; the Finance Act 2022 levies 30% income tax plus 1% TDS on VDA transfers; India committed at G20 to the OECD Crypto Asset Reporting Framework (CARF) with first information exchange by 2027.
Body: First, PMLA coverage — FIU-IND mandatory registration for crypto exchanges, KYC and STR obligations; Binance and KuCoin received show-cause notices and registered in 2023-24 after offshore operations. Second, no comprehensive Indian crypto law exists; the G20 IMF-FSB Synthesis Paper (September 2023) provides a global template under India's G20 presidency, but domestic legislation lags. Third, the WazirX hack of July 2024 (~US$230 million) exposed custody risks; the CBDC e-rupee retail pilot continues to mature in parallel.
Way forward: Pass a Crypto-asset Regulation Bill, operationalise CARF by 2027, license operations via IFSCA at GIFT City, and notify investor-protection rules under SEBI-RBI coordination by 2028.
What an examiner expects to see
- VDAs under PMLA from 7 March 2023
- 30% tax + 1% TDS under Finance Act 2022
- CARF OECD roadmap — first exchange by 2027
- FIU-IND registration for crypto exchanges
- Binance and KuCoin show-cause 2023-24
- G20 IMF-FSB Synthesis Paper Sept 2023
- IFSCA crypto-related framework
Concrete cases, schemes and judgments
- WazirX hack July 2024 (~$230 million)
- Bitconnect Ponzi cases in Gujarat
- CBDC pilot retail e-rupee