Any participation in transactions involving virtual digital assets or cryptocurrency, would come under the Prevention of Money Laundering Act or PMLA, the Centre has said.
This was announced through a gazette notification, issued on March 7.
The step has been taken to tighten misuse of digital assets.
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Government in the gazette has warned investors against "participation in and provision of financial services related to an issuer's offer and sale of a virtual digital asset".
"Exchange and transfer of virtual digital assets would also fall under PMLA laws," the notification further said.
According to the Income tax act, a virtual digital asset refers to any information, code, number, or token generated through cryptographic means.