India’s Financial Intelligence Unit (FIU) is seeing renewed interest from offshore crypto exchanges, with four additional exchanges requesting permission to operate in the country. Following approvals for Binance and KuCoin to operate in India again after being banned, the number of registered crypto entities in India is expected to jump to 48. Several exchanges were banned last year, which impacted the Indian crypto industry and led many users to trade on foreign exchanges. Binance recently stopped allowing cash payments for cryptocurrency trades in India to comply with regulations and enhance its reputation in the market.
In an effort to bring the crypto industry under its financial umbrella, India has mandated that cryptocurrency companies collect Know Your Customer (KYC) data and register with the FIU. All Virtual Asset Service Providers (VASPs) operating in India, regardless of physical location, are required to comply with these regulations and the Prevention of Money Laundering Act (PMLA). This move aims to integrate the crypto sector with the existing financial system and establish a framework for monitoring and regulation.
Despite skepticism from the crypto community, finance minister Nirmala Sitharaman retained her position under re-elected Prime Minister Narendra Modi. Sitharaman has expressed doubts about cryptocurrencies functioning as actual currencies but has emphasized the need for international cooperation in crypto policies. With the growing interest from offshore exchanges and the steps taken by the Indian government to regulate the crypto industry, the financial watchdog FIU is playing a crucial role in overseeing and monitoring crypto activities in the country.
The recent approvals for Binance and KuCoin to operate in India mark a significant development in the country’s crypto industry. Binance faced a reported $2 million penalty, while KuCoin was fined $34.5 lakh ($41,282) before being authorized to resume operations. The identities of the four new applicants seeking permission to operate in India have not been disclosed, but their approval is expected in the near future. The entry of these offshore exchanges, along with existing and newly registered entities, is expected to contribute to the growth and regulation of the Indian crypto market.
The ban on several exchanges last year and the subsequent reinstatement of Binance and KuCoin highlight the evolving regulatory landscape for crypto in India. With 46 registered crypto entities currently operating in the country, the approval of additional offshore exchanges reflects a shift towards greater regulatory oversight and integration of the crypto sector within the financial system. The decision to restrict cash payments for cryptocurrency trades by Binance, despite its market entry in India, underscores the importance of compliance with regulations and maintaining a positive reputation in the market.
As India continues to navigate the complexities of regulating cryptocurrencies, the role of the FIU in monitoring and overseeing crypto activities becomes increasingly significant. By mandating KYC data collection and FIU registration for VASPs, the Indian government aims to establish a framework for regulation that aligns with international standards. Despite mixed reactions from the crypto community regarding Finance Minister Sitharaman’s views on cryptocurrencies, the government’s commitment to integrating the sector within the financial system demonstrates a proactive approach towards regulating and overseeing the evolving crypto industry in India.
