In a significant step, India has taken stringent action against nine foreign cryptocurrency exchanges, including major platforms such as: Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex. The Government of India, through the Financial Intelligence Unit (FIU) of the Ministry of Finance, has issued a show-cause notice to foreign exchanges under the Prevention of Money Laundering Act (PMLA).
Compliance Show Cause Notice issued by FIU of India
In a recent announcement, FIU disclosed that it has issued compliance show cause notices to nine foreign cryptocurrency exchanges. It has also been revealed the government’s intention to block the URLs of these exchanges as they do not comply with PMLA regulations in India. However, no specific time frame or impact of non-compliance was explicitly outlined, as there is no precedent for such action in the country’s cryptocurrency industry.
The evolving regulatory landscape of the Indian cryptocurrency sector
The government’s move follows its previous declaration that 28 domestic cryptocurrency service providers are registered with the FIU. That number has now grown to 31. Last March, India’s finance ministry mandated that cryptocurrency companies register with the FIU and comply with its regulations. Various processes outlined in PMLA. This directive legally binds cryptocurrency companies to conduct verification processes such as know-your-customer (KYC) protocols.
According to FIU: Anti-Money Laundering (AML) And the Counter-Terrorism Financing (CFT) framework is mandatory for cryptocurrency businesses regardless of their physical presence in India. Despite serving a significant user base in India, several foreign entities have failed to register and operate within this regulatory framework, prompting the government’s recent action.
The Indian government’s stance on subjecting offshore cryptocurrency exchanges to regulatory oversight is an important step in streamlining the country’s cryptocurrency environment, emphasizing the need for compliance with AML/CFT protocols and compliance with the common regulatory framework.