The Financial Intelligence Unit India (FIU IND) has taken a significant step in regulating the crypto landscape by issuing compliance Show Cause Notices to nine offshore Crypto Exchanges or Virtual Digital Assets Service Providers (the names of those exchanges include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex) on December 28.
These notices come as a response to the entities’ non-compliance with the provisions of the Prevention of Money Laundering Act (PMLA) in India. The FIU IND has urged the Ministry of Electronics and Information Technology to block the URLs of these non-compliant entities, signaling a strict stance toward unregistered offshore platforms catering to Indian users.
Indian Government Pushing Effective Compliance for VDAs
This move emphasizes the obligation for VDA SPs, both offshore and onshore, to register with FIU IND as Reporting Entities and adhere to the regulations mandated under the PMLA. These obligations, including reporting, record-keeping, and compliance with Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) frameworks, apply regardless of physical presence in India.
Presently, 31 VDA SPs have registered with FIU IND, but several offshore entities had previously operated without fulfilling these essential requirements.
Director FIU IND’s action underscores the government’s commitment to bringing the crypto sector under a robust regulatory framework. The aim is to ensure transparency, combat financial crimes, and protect the interests of investors and users within the crypto ecosystem.
The enforcement of the PMLA on VDA SPs since March has mandated them to maintain stringent KYC protocols and uphold client identity verification measures. Furthermore, compliance includes the maintenance of records pertaining to financial transactions and business correspondence with clients, aligning with Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) guidelines. The names of the VDA SPs include:
A New Year Gift For Indian Crypto Exchanges
For Indian crypto exchanges, this development is poised to be a new year’s boon. The crackdown on non-compliant offshore exchanges is expected to channel trading activities towards compliant and registered exchanges within the country.
This shift could potentially elevate the trading volumes of Indian crypto exchanges, offering them a competitive edge while bolstering investor confidence in platforms adhering to regulatory standards.
The move aligns with the government’s efforts to foster a secure and regulated environment for cryptocurrency trading. By urging compliance from offshore exchanges serving Indian users, the authorities aim to streamline the crypto landscape, providing users with a more secure and legally compliant trading environment.
While this regulatory intervention signifies a stride towards transparency and legality, the impact on offshore exchanges and their future operations remains to be seen. It prompts the broader discussion on global cooperation in regulating the crypto sphere and ensuring a level playing field for all participants.
FIU IND’s actions to enforce compliance on offshore VDA SPs herald a promising beginning for the new year in the Indian crypto market. This step not only reinforces regulatory compliance but also promises enhanced security and credibility within the cryptocurrency ecosystem, potentially reshaping the dynamics of Indian crypto exchanges for the better.
To learn more about the developments transpiring related to Indian Crypto Exchanges, go check out SunCrypto Academy.
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