The Financial Intelligence Unit-India (FIU-India) may grant clearance to two more offshore crypto exchanges to resume operations in India by March next year, following its nod to Binance and KuCoin.
The intelligence unit, which deals with anti-money laundering compliance, is reportedly reviewing requests from four crypto exchanges previously banned for non-compliance with anti-money laundering laws in the country.
“We have received requests from four more offshore crypto exchanges to operate in India, and we assume that at least two of them will be permitted to resume operations by end FY25. This would be after undergoing a thorough review of transaction visibility, suspicious transaction reporting (STR), and other related issues,” said a source familiar with the matter.
However, the source refused to disclose the names of the crypto exchanges. It also mentioned that FIU-India is examining all aspects of these requests. Any necessary penalties will be imposed, similar to the actions taken with Binance and KuCoin.
“Only after complete due diligence, will we allow any crypto exchange to operate in India. We are very strict about compliance,” the official added.
An email sent to the finance ministry remained unanswered till the time of going to press.
In response to violations of India’s anti-money laundering regulations, FIU-India issued show cause notices to nine offshore cryptocurrency exchanges on December 28, 2023. It was for their ‘illegal’ operations within the country. Subsequently, the FIU-India requested the Ministry of Electronics and Information Technology (MeitY) to block the URLs of these exchanges in India.
Exchanges that received notices include Binance, Huobi, Kraken, Gate.io, KuCoin, Bitstamp, MEXC Global, Bittrex, and Bitfinex.
However, in August 2024, Binance registered itself as a reporting entity with FIU-India after receiving a show cause notice from the finance ministry for non-compliance with the country’s anti-money laundering laws. Subsequently, it has resumed its India operation. Additionally, FIU-India lifted the ban on KuCoin in March, after imposing a penalty of Rs 34.5 lakh. Currently, there are 48 registered crypto entities.
Business Standard reported last month that the consultation paper on cryptocurrency is expected to be released by September or October this year.
The paper will seek to determine whether to ban or legalise crypto assets in India.
In September 2023, the International Monetary Fund-Financial Stability Board (IMF-FSB) published a synthesis paper presenting guidelines for countries and a roadmap for crypto regulations. The paper offers insights into investor protection, cybersecurity, anti-money laundering, and counter-terrorism financing measures.
A senior finance ministry official had mentioned that the government is closely monitoring cryptocurrency (crypto)-related hacks and frauds in the country. These include a $230-million loss suffered by WazirX due to a cyberattack on July 19.
First Published: Sep 04 2024 | 11:16 PM IST
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