Lawrence Damilola
India’s Financial Intelligence Unit (FIU) is considering allowing two more offshore cryptocurrency exchanges to resume operations in the country.
The FIU, which oversees Anti-Money Laundering (AML) compliance, is currently scrutinizing requests from four foreign crypto exchanges that were previously banned for failing to meet the country’s AML regulations.
“We have received requests from four more offshore crypto exchanges to operate in India, and we assume that at least two of them will be permitted to resume operations by the end of FY25,” a source quoted by local media said. The same added that this would occur only after a “thorough review of transaction visibility, suspicious transaction reporting, and other related issues.”
The FIU has already allowed Binance and KuCoin to operate in the country after they registered as Virtual Asset Service Providers (VASPs) and addressed their compliance requirements. An FIU official emphasized, “Only after complete due diligence will we allow any crypto exchange to operate in India. We are very strict about compliance.”
Earlier, the FIU blocked nine offshore crypto exchanges from operating in India for non-compliance with AML norms. These actions included restricting access to the exchanges’ URLs and mobile applications.
Binance and KuCoin, two of the banned exchanges, were later approved to resume operations. After addressing non-compliance issues, KuCoin lifted its ban by paying a fine of ₹35.5 lakh (around $43,000). Similarly, Binance registered with the FIU as a reporting entity after reportedly paying a penalty of $2.25 million (₹18.8 crore).
Regarding registering new exchanges, FIU-IND Director Vivek Aggarwal stated that both Binance and KuCoin have been approved as VASPs, enabling full transaction visibility and initiating the suspicious transaction report process. He also mentioned that offshore exchanges do not need to form separate Indian entities but must have a compliance officer registered with FIU-IND.
The future of cryptocurrency operations in India may also be shaped by ongoing policy discussions. The Department of Economic Affairs (DEA) is preparing a consultation paper on cryptocurrency legislation, expected to be released by October. This paper aims to gather feedback from stakeholders to help shape future regulations.
“By seeking inputs from industry experts, companies, and the public, the government is not only fostering transparency but also ensuring that the resulting regulations will be well-rounded and reflective of the needs and aspirations of all the parties involved,” said Raj Karkara, chief operating officer of ZebPay.
India established a tax regime on cryptocurrency transactions in April 2022, imposing a 30% tax on unrealized crypto gains and a 1% tax deducted at source for every crypto transaction. However, the government has so far focused on combating crypto-related money laundering and terrorism financing rather than regulating the buying and selling of cryptocurrencies.
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Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
