India Cracks Down On 9 Global Crypto Exchanges Including Binance, Kraken

India’s Financial Intelligence Unit has issued compliance show cause notices to nine foreign crypto exchanges, including crypto giant Binance and Huobi, for allegedly operating illegally and breaking Anti-Money Laundering regulations. This is a huge move that could have a considerable impact on the local cryptocurrency industry. 

The Notice

India’s government has issued a stern warning to leading crypto exchanges operating illegally in the country.

India’s Financial Intelligence Unit (FIU), which falls under the nation’s Finance Ministry, issued notices to nine global crypto exchanges and asked the Ministry of Electronics and Information Technology to block the firms’ URLs — effectively preventing their websites from being accessed in the country until further notice.

Binance, Huobi, Kucoin, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex are the affected crypto service providers. The FIU said in a Dec. 28 press release that these entities have been operating without complying with the provisions of the nation’s Prevention of Money Laundering Act (PMLA). This means these crypto companies are legally obligated to perform verification procedures such as Know Your Customer (KYC).

“Till date 31 VDA SPs have registered with FIU IND. However, several offshore entities though catering to a substantial part of Indian users were not getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework,” reads the statement.

India’s Financial Intelligence Unit didn’t specify the timeframe or the punishment for not abiding by the notice as crypto precedents for such action in the nation are unavailable.

31 digital asset service providers have already registered with the FIU so far, the agency stated. But, a “substantial” number of Indian customers still preferred to use unregistered exchanges, prompting the latest regulatory action.

India And Crypto: A Complex Relationship 

India’s relationship with cryptocurrency over the years has been quite rocky.

The country previously mulled a blanket ban on cryptocurrencies, when the Reserve Bank of India (RBI) barred banks from providing their services to crypto businesses back in 2018. India’s Supreme Court lifted this banking ban in March 2020, leading to a period of regulatory murkiness.

India currently doesn’t have any specific crypto regulations in place for handling cryptocurrencies. The country, however, imposed a 30% tax on crypto gains in 2022.

India is reportedly now formulating a five-point global crypto regulatory framework based on joint recommendations by the International Monetary Fund (IMF) and the Financial Stability Board (FSB). This crypto framework promises a future where crypto companies in India can operate under regulations similar to those for authorized dealers.