Key Insights
- India’s financial crimes watchdog issues compliance notices to 9 major crypto exchanges including Binance, KuCoin, Bitfinex
- Authorities allege firms illegally solicited Indian users without registering locally as mandated under anti-money laundering laws
- Crackdown requests ISPs block access to non-compliant offshore platforms as India looks to assert control over its fast growing crypto economy
NEW DELHI (MarketsXplora) India’s financial crime agency has cracked down on several major global cryptocurrency exchanges, accusing them of illegally soliciting business from Indian residents without adhering to local anti-money laundering regulations.
The Financial Intelligence Unit (FIU) issued compliance notices Thursday to global crypto trading platforms including Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
Authorities stated that despite India emerging as the second highest adopter of cryptocurrencies behind only the United States, handling billions in estimated transaction volumes, these offshore exchanges had not registered with domestic regulators as mandated.
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Indian rules require all crypto trading platforms, whether domestic or foreign, catering to local users to register as a “Reporting Entity” with the FIU. This designation legally obligates firms to implement identity verification programs and report suspicious transactions under prevention of money laundering laws.
However, the FIU suggested several major players were skirting laws by not formally registering their Indian operations. The agency has requested internet service providers block access to these platforms.
India ranked first globally in Chainalysis’ 2022 Crypto Adoption Index thanks to surging adoption among its tech-savvy youth population. Tighter regulation now looms as authorities grow concerned over money laundering vulnerabilities.
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A national cryptocurrency legislation expected in 2024 may enforce advanced identity proofing, real-time audits of reserves and unified tax policies across Indian states. Crypto platforms may also fall under similar oversight as banks and other licensed financial institutions.
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For now, this week’s FIU crackdown signals that global exchanges soliciting Indian traders can no longer fly under the radar without adhering to local reporting rules. Those who fail to formally register may face service disruptions as India asserts control over its fast-growing crypto economy.