PMLA 2002 Amended to Include Cryptocurrency Trade
The Indian government has recently amended the Prevention of Money Laundering Act (PMLA) 2002 to include transactions related to cryptocurrencies such as Bitcoin, Ethereum, and other digital currencies. This move comes after the Reserve Bank of India (RBI) had banned banks from dealing with cryptocurrency exchanges in 2018, leading to a sharp drop in trading volumes. The amendment was passed by the Lok Sabha, the lower house of Parliament, in March 2021 and was later approved by the Rajya Sabha, the upper house of Parliament, in April 2021.
Why this News is Important
The amendment to the PMLA 2002 to include cryptocurrency trade is an important development for the growing cryptocurrency market in India. The previous ban on banks dealing with cryptocurrency exchanges had made it difficult for traders to buy and sell digital currencies. The new amendment will now allow for greater transparency in cryptocurrency transactions and will help in curbing illegal activities such as money laundering and terror financing.
Historical Context
The RBI had banned banks from dealing with cryptocurrency exchanges in 2018, citing concerns over the risks associated with digital currencies. This had led to a decline in trading volumes and had made it difficult for traders to buy and sell cryptocurrencies. However, the ban was overturned by the Supreme Court of India in March 2020, which ruled that the RBI’s ban was unconstitutional. Since then, there has been a surge in interest in cryptocurrencies in India, with many investors and traders flocking to digital currencies as an alternative asset class.
Key Takeaways from “PMLA 2002 Amended to Include Cryptocurrency Trade”
| Sr. No. | Key Takeaway |
|---|---|
| 1. | The Indian government has amended the Prevention of Money Laundering Act (PMLA) 2002 to include transactions related to cryptocurrencies. |
| 2. | The previous ban on banks dealing with cryptocurrency exchanges had made it difficult for traders to buy and sell digital currencies. |
| 3. | The new amendment will allow for greater transparency in cryptocurrency transactions and will help in curbing illegal activities such as money laundering and terror financing. |
| 4. | The ban on banks dealing with cryptocurrency exchanges was overturned by the Supreme Court of India in March 2020, leading to a surge in interest in cryptocurrencies in India. |
| 5. | Cryptocurrencies are becoming an increasingly popular asset class in India, with many investors and traders looking to invest in digital currencies. |
Conclusion
In conclusion, the amendment to the PMLA 2002 to include cryptocurrency trade is a positive development for the cryptocurrency market in India. It will provide greater transparency in transactions and help in curbing illegal activities associated with cryptocurrencies. This move will also help to legitimize the use of digital currencies in the country, and is expected to lead to further growth in the cryptocurrency market in India.
Important FAQs for Students from this News
Q: What is the Prevention of Money Laundering Act (PMLA) 2002?
A: The PMLA 2002 is an Indian law that aims to prevent money laundering and other financial crimes.
Q: What is cryptocurrency?
A: Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank.
Q: What is the impact of the amendment to the PMLA 2002 on the cryptocurrency market in India?
A: The amendment will allow for greater transparency in cryptocurrency transactions and will help in curbing illegal activities such as money laundering and terror financing. This move will also help to legitimize the use of digital currencies in the country, and is expected to lead to further growth in the cryptocurrency market in India.
Q: Was the RBI’s ban on banks dealing with cryptocurrency exchanges overturned?
A: Yes, the ban was overturned by the Supreme Court of India in March 2020.
Q: What is the status of cryptocurrencies in India?
A: Cryptocurrencies are becoming an increasingly popular asset class in India, with many investors and traders looking to invest in digital currencies.
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