In a significant development for the cryptocurrency industry, Binance, the world’s largest cryptocurrency exchange, and its competitor KuCoin have secured approval from India’s anti-money laundering unit. This decision comes months after both exchanges were banned for purported illegal operations. The registration with the Financial Intelligence Unit of India (FIU-IND), under the nation’s Finance Ministry, marks a pivotal moment for the crypto sector in India. These exchanges were among the nine offshore entities banned at the end of the previous year, including names like Huobi, Kraken, and others.
Vivek Aggarwal, the head of FIU-IND, highlighted the importance of this move, stating that it signifies a shift in credibility for the crypto industry within the nation. Speaking to financial journalists, Aggarwal emphasized the necessity of collaboration between regulatory bodies and the crypto industry to ensure compliance with anti-money laundering laws. KuCoin has already paid a penalty of $41,000 and resumed its operations. However, Binance’s operations remain suspended pending the outcome of a hearing with FIU-IND. Reports suggest that Binance could face a fine of $2 million, pending the hearing’s conclusion.
Aggarwal clarified that while Binance is registered, the determination of the penalty is still underway. He stressed the importance of such regulatory measures in safeguarding the Indian economy against financial crimes. Negotiations are also underway with other sanctioned platforms like Kraken, Gemini, and Gate.io, while OKX and Bitstamp have submitted exit plans from the country. Currently, India boasts 48 registered crypto entities under the Prevention of Money Laundering Act.
The regulatory stance on crypto in India has been somewhat ambiguous. Despite imposing strict taxes and witnessing a migration of traders to international exchanges, India aims to achieve global consensus on framing crypto policies, as highlighted during its G20 presidency in 2023. The unveiling of a report titled “Virtual Digital Asset Service Providers: Road to Effective Compliance under PMLA” underscores efforts to foster a regulatory environment conducive to innovation while mitigating money laundering risks.
Offshore entities seeking registration with FIU-IND are not mandated to have a physical presence in India but must appoint a principal compliance officer, ensuring accountability and adherence to regulatory standards. This requirement underscores the importance placed on compliance and transparency within the cryptocurrency industry. Furthermore, entities that have initiated discussions but have not yet secured registration continue to face restrictions, highlighting India’s unwavering commitment to robust anti-money laundering and counter-terrorism frameworks aimed at safeguarding financial integrity and national security.