India’s Financial Intelligence Unit (FIU) has issued compliance notices to nine prominent foreign virtual digital asset service providers, including global crypto exchanges Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. The notices allege illegal operations and violations of Anti-Money Laundering (AML) regulations. The FIU has requested the Ministry of Electronics and Information Technology block the URLs of these companies, aiming to restrict access to their websites within the country.


Key Points:

  • Compliance Notices: India’s FIU issued compliance notices to nine foreign virtual digital asset service providers for allegedly operating illegally and violating AML regulations. The companies include major global crypto exchanges such as Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

  • Request for URL Blocking: The FIU has requested the Ministry of Electronics and Information Technology to block the URLs of the mentioned crypto exchanges. This move aims to prevent access to their websites within India, aligning with regulatory efforts to address illegal operations in the cryptocurrency space.

  • Registration Requirements: Digital asset providers, whether based in India or offshore, are required to register with the Financial Intelligence Unit as reporting entities. Once registered, these entities must adhere to the regulations outlined in the Prevention of Money Laundering Act (PMLA) 2002, including Know Your Customer (KYC) guidelines for client onboarding.

  • Growing Crypto Adoption: India has witnessed significant growth in crypto adoption, ranking as the top country in Chainalysis’ global crypto adoption index of 2022. The country has become the second-largest market by raw estimated transaction volume globally, following the United States.

  • Regulatory Framework: Indian regulators are working on a comprehensive crypto regulatory framework based on joint recommendations from the International Monetary Fund and the Financial Stability Board. The framework, scheduled for release in 2024, is expected to include advanced KYC rules, real-time proof-of-reserve audits, uniform tax policies, and a status for crypto exchanges similar to authorized dealers under the Reserve Bank of India guidelines.

Implications and Outlook: India’s regulatory actions against major global crypto exchanges underscore the growing scrutiny and regulatory efforts in response to the increasing adoption of cryptocurrencies. The FIU’s request to block URLs demonstrates a commitment to curbing potential illegal activities and ensuring compliance with AML regulations.

As India works on its crypto regulatory framework, the industry anticipates clearer guidelines and requirements for digital asset service providers. The proposed framework, set to be released in 2024, is likely to bring about significant changes in the regulatory landscape, including enhanced KYC measures, real-time audits, and a standardized tax policy.

The blocking of URLs for non-compliant crypto exchanges reflects a proactive approach by regulators to maintain oversight and prevent unauthorized access to crypto platforms. The industry will closely monitor developments in India’s regulatory environment, considering the potential impact on global crypto exchanges and their operations within the country.

Conclusion: India’s Financial Intelligence Unit's issuance of compliance notices and the request to block URLs for major global crypto exchanges signal a concerted effort to strengthen regulatory oversight in the cryptocurrency space. As India positions itself as a key player in the global crypto market, the forthcoming regulatory framework is expected to play a crucial role in shaping the industry's landscape, ensuring compliance with AML regulations, and fostering responsible crypto adoption. The industry awaits further clarity on regulatory requirements and anticipates ongoing collaboration between regulators and the crypto sector to achieve a balanced and secure ecosystem.


(ANA PAULA PEREIRA, COINTELEGRAPH, 2023)