The Financial Intelligence Unit-India (FIU-IND) has urged the Indian government to block access to nine overseas cryptocurrency exchanges due to non-compliance with anti-money laundering rules. In an official statement, the Finance Ministry revealed that FIU-IND issued compliance Show Cause Notices to these offshore Virtual Digital Assets Service Providers (VDA SPs) under the Prevention of Money Laundering Act, 2002. The FIU-IND, reporting directly to the Economic Intelligence Council headed by the Union finance minister, emphasized the need for these entities to comply with the regulations, including reporting, record-keeping, and registration obligations. The nine entities include Binance, Bittrex, Huobi, and MEXC Global.
Cryptocurrencies, seen as a threat to financial stability, have raised concerns globally due to their lack of regulation. The FIU-IND stated that compliance obligations are activity-based, not contingent on physical presence in India. While 31 VDA SPs have registered with FIU-IND to date, several offshore entities serving a significant Indian user base failed to register. The mentioned entities, including Binance, Kucoin, and Bitstamp, were pinpointed for their non-compliance, with addresses linked to tax havens such as Seychelles, Cayman Islands, and others.
In response to the non-compliance, FIU-IND has written to the Ministry of Electronics and Information Technology (MeitY) to block the URLs of these entities operating illegally in India. The move reflects ongoing efforts by Indian authorities to regulate and monitor cryptocurrency activities in the country, balancing the innovation potential of blockchain and digital assets with the need for financial security and compliance. As the regulatory landscape evolves, these actions may shape the future of cryptocurrency exchanges’ operations in India, impacting their ability to cater to the Indian market and prompting a reevaluation of compliance measures by global platforms.