KEY POINTS
- Nine major crypto exchanges face possible ban of their respective websites in India
- The affected crypto businesses include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex
- This development comes after the inclusion of Virtual Assets Service Providers under the AML-CFT framework in March
India's Financial Intelligence Unit (FIU), the agency responsible for monitoring and regulating financial activities in the country, issued compliance notices to nine major centralized crypto exchange platforms, and asked the Ministry of Electronics and Information Technology to block their websites for illegally operating in the nation.
The latest move by India's FIU, which includes the issuance of show cause notices to foreign crypto exchange platforms, is part of the compliance action against foreign entities operating in the country for their non-compliance with India's Anti-Money Laundering and Counter Financing of Terrorism (AML-CFT) laws.
The affected crypto businesses include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex.
These exchanges -- based in various countries like the Seychelles, Singapore, the British Virgin Islands, the United States, Luxembourg, and the Cayman Islands -- are now under scrutiny for their "illegal operations" in India, which can lead to the blacklisting of their websites if the FIU's request to the Ministry of Electronics and Information Technology is approved.
The FIU's action is centered on businesses operating without registration and compliance with the PMLA, requiring a response to explain their operations concerning Indian users.
By enforcing regulation, the government is emphasizing the importance of complying with regulatory requirements, particularly those that concern financial security measures and money laundering and terrorism financing.
"Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc. are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002," the FIU said in a press release.
"The obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND," the financial watchdog further said.
The regulator also noted that while 31 providers have registered with the agency, offshore entities "catering to a substantial part of Indian users" have not done so.
This development comes after the inclusion of Virtual Assets Service Providers under the AML-CFT framework in March 2023, which underlines India's commitment to regulating the nascent but rapidly growing industry.
