Market News

FIU Mandates Crypto Compliance as India Struggles with Unregulated Landscape

India's crypto landscape continues to be fraught with confusion as the government acknowledges the absence of a regulatory framework for digital assets.

Minister of State for Finance Pankaj Chaudhary recently clarified that while cryptocurrencies remain unregulated, all Virtual Asset Service Providers (VASPs) must register with the Financial Intelligence Unit (FIU) under the Prevention of Money Laundering Act.

This mandatory registration applies to both domestic and international crypto platforms catering to Indian users.

Despite the lack of clear legal status for crypto exchanges, compliance checks have already started, highlighting a complex relationship between regulation and operation.

Additionally, Indian crypto traders are grappling with significant financial burdens due to a flat 30% tax on profits and a 1% Tax Deducted at Source on every transaction, regardless of profitability.

High-profile hacks on domestic exchanges, such as the $234 million exploit of WazirX, have further eroded user trust.

In an effort to establish a regulatory framework, the COINS Act has been proposed, aiming to prioritize rights and self-custody while introducing a dedicated regulatory body for cryptocurrencies.

Although the COINS Act has not yet become law, it presents a potential path forward for the regulation of crypto in India.

As the crypto environment evolves, traders, investors, and platforms will need to stay vigilant and informed about compliance requirements and market conditions.

The FIU's mandate for VASP registration signals a shift toward accountability in an otherwise unregulated space.