Maharashtra Assembly Passes Bill To Bring Crypto Assets Under MPID Act

The Maharashtra Legislature has passed amendments to the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999, bringing virtual digital assets (VDAs), which includes cryptocurrencies and other digital assets, under its ambit. It has also introduced some revision to the state’s legal framework for handling financial fraud cases.

The MPID Act is a state law designed to protect depositors or investors who entrust their money with financial establishments from fraud or default. It allows authorities to take action against fraudulent entities and recover money for affected investors.

Now, the amendment has been expanded to include VDAs, thereby, allowing authorities to attach and recover crypto assets linked to financial frauds.

Virtual Digital Assets Now Included Under MPID Act

The Maharashtra government said the amendments were introduced to address the increasing use of cryptocurrencies, digital coins and other Blockchain-based assets in financial frauds and unauthorised deposit schemes. As these assets were not covered under the existing definition of deposit under the MPID Act, authorities usually faced challenges in dealing with these cases.

To address this gap, the amendment has now expanded the definition of deposit under the MPID Act to include VDAs. According to a report by The Times of India, VDAs will carry the same meaning assigned under Section 2(111) of the Income-tax Act, 2025, enabling authorities to take action against crypto assets linked to financial fraud cases.

New Rules To Reduce Delays In MPID Cases

The Bill introduced by the state government aims to reduce delays in MPID cases by limiting adjournments in designated courts and requiring financial establishments to deposit 50 per cent of their total liability before their appeals against recovery orders are considered.

Also, courts handling MPID cases can grant a maximum of two adjournments. A third adjournment will be allowed only in exceptional situations, and only after the court records written reasons for it.

The amendments further aim to prevent financial establishments from using appeals as a way to delay repayment to investors.