India’s Financial Intelligence Unit (FIU) has declared that nine global crypto exchanges, including major players like Binance, Kraken, Kucoin, and Mexc, are operating “illegally” within the country. The FIU, responsible for monitoring financial transactions, alleges that these exchanges have failed to comply with India’s anti-money laundering (AML) regulations. Consequently, the agency has issued show-cause notices to the concerned entities, urging the Ministry of Information Technology to block their websites as the crypto crackdown in India intensifies.
Global Crypto Exchanges Face Allegations
The FIU’s scrutiny emphasizes that despite not having a physical presence in India, global crypto exchanges are obligated to adhere to the country’s AML rules. The agency contends that numerous offshore entities, serving a significant portion of Indian users, have not registered under the AML and Counter Financing of Terrorism (CFT) framework, raising concerns about potential financial risks.
Cryptocurrencies were brought under India’s AML/CFT framework in March of the current year, requiring compliance from crypto firms. While 31 crypto entities have registered with FIU, some Indian traders have shifted to global platforms to potentially evade taxes, prompted by India’s introduction of a 30% tax on gains and a 1% deduction on each crypto transaction.
Crypto Crackdown in India
Notable exchanges found violating India’s regulations include Huobi, Gate.io, Bittrex, Bitstamp, and Bitfinex. The FIU’s directive aims to enforce compliance among offshore Virtual Digital Assets Service Providers (VDA SPs) to create a secure VDA ecosystem. Sumit Gupta, CEO of CoinDCX, a compliant Indian exchange, asserts that the FIU’s actions will mitigate risks and enhance the security of the crypto ecosystem. Earlier, Binance founder Changpeng “CZ” Zhao said that the firm wasn’t keen on expanding in India because the South Asian market hadn’t created a crypto-friendly environment.
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