What are Virtual Digital Assets (VDA)?

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What are Virtual Digital Assets (VDA)? Blog Image

Overview:

The Finance Ministry recently brought out a notification placing all transactions involving virtual digital assets under the purview of the Prevention of Money Laundering Act (PMLA).

About Virtual Digital Assets (VDA):

  • According to the Income tax act, 'virtual digital asset' refers to any information, code, number, or token (not being Indian currency or foreign currency) generated through cryptographic means or otherwise and can be called by whatever name.
  • It can be transferred, stored, or traded electronically.
  • The definition of VDA also specifically includes a non-fungible token, i.e., NFT, or any other token of similar nature, by whatever name is called.

 

What are Non-fungible tokens (NFTs)?

  • NFTs are assets that have been tokenized via a blockchain.
  • They are assigned unique identification codes and metadata that distinguish them from other tokens.
  • NFTs can be traded and exchanged for money, cryptocurrencies, or other NFTs.
  • NFTs can represent digital or real-world items like artwork and real estate. They can also represent individuals' identities, property rights, and more.

 


Q1) What are Cryptocurrencies?

A cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.

Source: Belated, but essential: On bringing all trade in virtual digital assets under the PMLA