India's Financial Intelligence Unit has served compliance notices to nine foreign virtual digital asset service providers, alleging their illegal operation and violation of anti-money laundering regulations.
The entities include major global crypto exchanges such as Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. The press release issued on December 28 emphasized the unit's request to the Ministry of Electronics and Information Technology to block these companies' URLs, ostensibly to prevent access to their websites within the country.
According to the statement, while 31 virtual digital asset service providers (VDA SPs) have registered with FIU IND, several offshore entities, despite catering to a considerable Indian user base, are not compliant with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) frameworks.
The regulations in India mandate that digital asset providers, whether operating within or outside the country, must adhere to specific regulatory requisites. These include registration as a "reporting entity" with the Financial Intelligence Unit and compliance with the Anti-Money Laundering Act, 2002 (PMLA). The law enforces various obligations, such as Know Your Customer (KYC) guidelines for new customers, aimed at thwarting money laundering activities.
India, ranked first in Chainalysis's 2022 Global Cryptocurrency Adoption Index, holds the position as the world's second-largest market by estimated transaction volume, trailing only the United States.
In response to the burgeoning popularity of cryptocurrencies, Indian regulators are working on formulating a cryptocurrency regulatory framework, drawing from joint recommendations by the International Monetary Fund and the Financial Stability Board.
This anticipated framework, slated for release in 2024, is expected to introduce stringent KYC norms for crypto entities and mandate real-time reserve audit certificates. Additionally, it might propose a unified tax policy across nations and grant cryptocurrency exchanges a status akin to authorized dealers, similar to banks, under the guidance of the Reserve Bank of India.
