The Financial Intelligence Unit of India (FIU-IND) announced on May 10 that Binance and KuCoin have successfully registered with the regulatory body, marking a shift in credibility for the cryptocurrency industry in the country. Last year, several offshore entities, including Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, were banned in India. Vivek Aggarwal, head of FIU-IND, stated that the unit plans to collaborate with the industry to review compliance guidelines related to anti-money laundering laws for virtual digital asset service providers, emphasizing that the legitimacy and credibility of the industry depend on the government and parliament’s support.
KuCoin, the first crypto entity to pay a penalty of $41,000, has already resumed its operations in India, while Binance is expected to settle its penalty after a hearing with FIU. Sources suggest that Binance may face a $2 million fine and negotiations are ongoing with other sanctioned platforms such as Kraken, Gemini, and Gate.io. OKX and Bitstamp have submitted plans to exit the Indian market, while Binance previously held a dominant market share in the country. A total of 48 crypto entities are now registered as reporting entities under India’s Prevention of Money Laundering Act, with discussions ongoing between the regulator and the sanctioned platforms.
India’s stance on cryptocurrencies has been ambiguous, with the imposition of strict crypto taxes in 2022 and a market downturn leading Indian traders to switch to international exchanges. However, trading volumes returned to Indian exchanges after the ban on offshore entities, with India aiming to achieve global consensus on crypto policies as part of its G20 presidency in 2023. The country obtained agreement from all G20 members on global guidelines, but faced criticism for pushing for consensus without having its own legislation in place. The Indian government has kept a crypto bill on hold since 2021, with a decision on its position expected in the coming months, according to a senior lawmaker.
The approval of Binance and KuCoin by the Financial Intelligence Unit of India is a significant development for the cryptocurrency industry in the country, as it demonstrates a shift towards greater credibility and legitimacy. Collaborations between the regulatory body and the industry to review compliance guidelines related to anti-money laundering laws for virtual digital asset service providers are expected to enhance the industry’s reputation. With a total of 48 crypto entities now registered under India’s Prevention of Money Laundering Act, discussions between the regulator and the sanctioned platforms, including negotiations about fines and exits from the Indian market, are ongoing.
India’s role in achieving global consensus on cryptocurrency policies as part of its G20 presidency in 2023 highlights the country’s commitment to engaging with international stakeholders on regulatory frameworks. While the Indian government has faced criticism for pushing for global guidelines without enacting its own legislation, the decision on its crypto bill is anticipated in the coming months. The impact of strict crypto taxes, market downturns, and the ban on offshore entities on the local crypto industry underscores the need for clarity and coherence in India’s cryptocurrency regulations. As the industry navigates these challenges, the stance and decisions taken by the government will play a crucial role in shaping the future of cryptocurrencies in India.
