In a recent development, the Financial Intelligence Unit-India (FIU-India) has received applications from four more offshore crypto exchanges seeking to re-enter the Indian market, according to a senior government official.
This comes after India banned nine crypto exchanges, including Binance, Kucoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfinex, in early 2024 for violating anti-money laundering laws.
The official mentioned that, besides Kucoin and Binance, four additional offshore exchanges have submitted requests to resume operations in India. Despite reaching out, the Union Ministry of Finance has not provided any comment.
Kucoin had its ban lifted in March after paying a penalty of Rs 34.5 lakh ($345 million) and became the first crypto exchange to fully comply with FIU regulations. Proceedings for Binance are still ongoing, but the official is optimistic about Binance resuming operations soon.
Before the December 28 ban, FIU-India had issued show-cause notices to the nine exchanges for breaching India’s anti-money laundering regulations.
Sharat Chandra, co-founder of the India Blockchain Forum, emphasized that India’s growing grassroots crypto adoption and active Web3 developer community make the market too significant for offshore exchanges to ignore, despite challenging tax policies and strict compliance requirements. He highlighted the increasing acceptance of tokenized bonds and securities-focused use cases as key drivers for this interest.
Currently, India has 46 registered crypto entities. With Kucoin and Binance returning, the total will rise to 48. Meanwhile, Reserve Bank of India Governor Shaktikanta Das remains firm on banning crypto assets, even as global trends lean towards regulation.
In September 2023, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) released a synthesis paper with guidelines for crypto regulations. This paper covers important areas like investor protection, cybersecurity, and measures against money laundering and terrorism financing.
In October 2023, G20 finance ministers and central bank governors adopted this roadmap during a meeting in Marrakech, under India’s presidency. They urged countries to implement these policy frameworks swiftly and called for global coordination and cooperation.
The communiqué from this meeting also requested that the IMF and FSB provide regular updates on the progress of the G20 roadmap and support the global implementation of Financial Action Task Force (FATF) standards on crypto assets.
Governor Das had earlier stated that the IMF-FSB paper highlighted the risks of crypto. He mentioned that regulation could range from zero (no regulation) to ten (total prohibition) and emphasized the need for the FSB to delve into the detailed aspects of regulation.
