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India’s financial regulatory authority, the Securities and Exchange Board of India (SEBI), has issued a circular outlining new rules for digital asset platforms operating in the country. As of now, all digital asset platforms will have to comply with the same anti-money laundering (AML) standards as traditional financial entities.
This decision comes after the Reserve Bank of India (RBI) lifted its ban on cryptocurrencies earlier this year, opening up the market to new players. The SEBI’s guidelines require digital asset platforms to take steps to verify the identities of their customers, including KYC (Know Your Customer) and AML checks.
Digital asset platforms in India must also implement a risk management framework that ensures the appropriate level of oversight and control over their operations. The framework must identify, assess and manage risks, including third-party risks, and provide for appropriate reporting and escalation mechanisms.
The SEBI has stressed the need for digital asset platforms to build robust compliance programs in order to detect and prevent money laundering and terrorism financing. To this end, the regulator recommends regular training of employees involved in AML and the establishment of internal committees to oversee the application and monitoring of AML procedures.
The move is seen as a positive step by industry experts, who believe that regulation will help to clear up some of the previous uncertainty surrounding digital asset trading in India. At the same time, some stakeholders believe that more detailed guidelines are needed in order to provide more clarity in the sector.
The SEBI’s guidelines on AML for digital asset platforms are part of a wider trend towards greater regulation of the sector globally. Authorities in the US, Europe, and Asia have all been taking steps to bring digital asset trading into line with traditional financial regulations, in order to provide greater protection to investors and combat illegal activities such as money laundering and terrorism financing.
Overall, India’s new digital asset trading requirements should provide greater transparency and security for participants in the sector while also helping to reduce illegal activity in the industry.