In a significant move, India has initiated stringent actions against nine foreign cryptocurrency exchanges, including major platforms like Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. The Indian government, through its Financial Intelligence Unit (FIU) under the Finance Ministry, issued compliance show cause notices to these offshore exchanges under the Prevention of Money Laundering Act (PMLA).
Compliance Show Cause Notices Issued by India’s FIU
The FIU, in its recent announcement, disclosed the issuance of compliance show cause notices to nine offshore crypto exchanges. Additionally, it revealed the government’s intent to block the URLs of these exchanges due to their non-compliance with the PMLA regulations within India. However, specific timeframes or the repercussions of non-compliance were not explicitly outlined, as no precedent exists in the country’s crypto space for such actions.
Evolving Regulatory Landscape in India’s Crypto Sector
The government’s actions come on the heels of an earlier declaration indicating the registration of 28 domestic crypto service providers with the FIU, a number that has now risen to 31. In March, India’s Finance Ministry mandated that crypto businesses register with the FIU and adhere to various processes outlined in the PMLA. This directive legally bound crypto entities to undertake verification processes such as Know Your Customer (KYC) protocols.
According to the FIU, compliance with anti-money laundering (AML) and counter-financing of terrorism (CFT) frameworks is obligatory for crypto businesses, irrespective of their physical presence within India. Despite serving a significant user base in India, several offshore entities failed to register and operate within this regulatory framework, prompting the government’s recent actions.
The Indian government’s stance on bringing offshore crypto exchanges under regulatory oversight is a significant step in streamlining the country’s crypto landscape, emphasizing the necessity for adherence to AML/CFT protocols and compliance with prevailing regulatory frameworks.
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