- At the outset, let’s wonder how the digitization efforts are not only defining the global communities’ way of living in sync with the evolving technology-driven initiatives but also offering such an easy and formidable option for the users. Even as dynamically evolving information technology offers unimaginable solutions to make a better living for citizens, there are not so unfounded apprehensions surrounding the same vis-à-vis data safety. The gullible citizens are not only being lured by the dubious elements leading to the loss of hard-earned money getting siphoned off in a jiffy but also placing the government authorities in a piquant situation to address the matter adroitly. Did someone say, digitization too is like a double-edged sword? Absolutely.
- It’s a no-brainer to realise that the digital economy is the most happening aspect upheld by every government across the globe. We know how the Indian leadership has laid tremendous stress and focus on the Digital India campaign over the last few years. However, apprehensions about data theft leading to anti-social elements and fraudsters reigning supreme have only manifested in a troublesome manner. Despite making attempts at creating widespread awareness not to fall prey to luring attempts by digital fraudsters, a notable number of citizens being bested is on the rise. And then, there is the cryptocurrency conundrum that has gained notoriety in the last few years. Let’s delve further into comprehending how the situation is panning out in India.
- Against this backdrop, India’s evolving regulatory framework for crypto assets recorded an important development this week when GOI brought intermediaries dealing with it under the umbrella of the money laundering legislation. They now need to follow the relevant KYC standards and also report suspicious transactions. To put this development in context, go back to the Parliament’s winter session of 2021. Prior to it, GOI indicated a bill to regulate crypto assets would be tabled. However, a bill was never introduced. Since then, GOI has gradually come around to accepting it as one among the menu of financial assets on offer. It also acknowledged the limitation of having a standalone domestic regulation for virtual assets.
- For instance, in February, GOI informed Parliament that as crypto assets are not confined by national boundaries, regulation will be effective only if there’s an international collaboration on evolving a common regulatory framework. Therefore, India is utilizing the G20 platform to catalyse a common framework. Separately, RBI had asked financial intermediaries it regulates to follow KYC norms and other relevant standards for remittances following transactions in crypto assets. On its part, the Enforcement Directorate has investigated transactions it has deemed suspicious. Given this background, GOI’s latest notification is a corollary to recent developments. Crypto assets need to be treated as financial assets with intermediaries required to follow reporting standards. It’s an important move to plug the digital loophole.