In a major regulatory move, India’s Financial Intelligence Unit (FIU) has issued compliance show-cause notices to nine offshore Virtual Digital Assets (VDA) service providers, including industry giant Binance, for allegedly operating illegally in the country without adhering to local money laundering laws. The list comprises Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
The Indian finance ministry, in a statement on December 28, directed the information technology ministry to block the URLs of these entities. It emphasized that both offshore and onshore VDA service providers must register with the Financial Intelligence Unit-India and abide by the Prevention of Money Laundering Act (PMLA), 2002 if they are involved in activities such as virtual-to-fiat swaps and the administration of virtual assets.
FIU-India was assigned with collecting, analyzing and disseminating information regarding suspicious financial transactions and showed its obligation is activity-based rather than locational; many Indian users utilized offshore entities that weren’t compliant with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) frameworks.
India is taking steps towards developing a regulatory framework for the cryptocurrency sector, following increasing scrutiny on exchanges worldwide and concerns that digital assets might be misused to engage in illegal financial activity. With this new move, they join global efforts at setting rules around cryptocurrency trading exchanges while taking proactive steps against their misuse for illegal financial purposes.
The show-cause notices signal a heightened regulatory environment, and the responses from these service providers could have significant implications for the cryptocurrency industry in India. This development follows a series of regulatory actions globally, emphasizing the importance of compliance and legitimacy in the evolving landscape of digital assets.
