Crypto Transactions May Face Stricter Monitoring As Parliamentary Panel Prepares Report

Cryptocurrency adoption has been growing in India, but digital assets remain outside a formal regulatory framework. A Parliamentary panel may now recommend stricter monitoring of crypto transactions and wider consultations on their legal treatment.

The Parliamentary Standing Committee on Finance, headed by BJP MP Bhartruhari Mahtab, has examined various aspects of Virtual Digital Assets (VDAs), the legal term used for cryptocurrencies and non-fungible tokens (NFTs), for more than a year. The panel has held more than half a dozen meetings and is preparing a report for submission to the Speaker of the Lok Sabha.

One of the panel's possible recommendations could be stricter action to monitor cryptocurrency transactions, a source aware of the matter told PTI. It may also suggest wider consultations on the legal treatment of digital assets and the use of the latest technology to strengthen the monitoring of VDAs.

What Could Change For Crypto Monitoring

The panel may recommend greater use of technology to monitor digital asset transactions. It could also call for wider consultations on how VDAs should be treated legally, as the government continues to assess issues surrounding these assets.

Crypto assets are borderless, making international cooperation important for preventing regulatory arbitrage. The government has previously told Parliament that any legislation to regulate or ban VDAs would require international collaboration to assess their risks and benefits, along with common taxonomy and standards.

What Has The Finance Ministry Said About Crypto Risks

India does not recognise crypto as an asset and has not issued any direction to regulate cryptocurrencies in the country. The Finance Ministry last month warned the general public that crypto products and NFTs are unregulated and can be highly risky. It also cautioned that investors may have no regulatory recourse in case of losses.

However, VDA service providers are covered under the anti-money laundering framework. The Financial Intelligence Unit-India (FIU-IND), under the Ministry of Finance, recently issued notices to 15 VDA Service Providers for non-compliance with the Prevention of Money Laundering Act (PMLA).

VDA service providers came under the PMLA’s AML/CFT framework in March 2023. The panel’s report is expected to give its views on how crypto transactions should be monitored and how digital assets should be treated legally.