Context:

The Finance Ministry’s March 7 notification placed all transactions involving virtual digital assets under the purview of the Prevention of Money Laundering Act (PMLA).

International body for Money Laundering:

• The intergovernmental Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog.
• It has been continuously flagging the potential that virtual digital assets have for criminal misuse considering the speed and anonymity with which they can be traded worldwide. 

The Need for Regulation of Virtual Digital Assets

• To formulate an appropriate regulatory response to deal with the pandemic-era upsurge in advertisements soliciting investment in virtual assets as well as reports of actual investment. 
• The volume of trade in unregulated virtual assets has grown sizeably in recent years. 
• The Enforcement Directorate was ‘investigating several cases related to cryptocurrency frauds wherein a few crypto exchanges had been found involved in money laundering’. 

Benefits of decision taken:

• Lays the onus of ascertaining the provenance of all activity, including safekeeping, in such assets upon individuals and businesses participating in or facilitating these transactions.

Way Forward:

While the Centre’s decision to add the PMLA monitoring requirements, the RBI’s consistent advocacy for a ban needs to be seriously weighed before any decision is taken on the fate of the long-delayed draft legislation on virtual assets.

News Source: The Hindu

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