India’s Financial Intelligence Unit (FIU-India) is expected to grant clearance to two additional offshore crypto exchanges to resume operations by March 2025, following its approval of Binance and KuCoin. These exchanges had previously been banned for failing to comply with anti-money laundering (AML) regulations in the country.
A source familiar with the matter revealed that FIU-India has received requests from four more offshore crypto platforms. “At least two of them are likely to be allowed to resume operations by the end of FY25, pending a thorough review of transaction transparency, suspicious transaction reporting, and other related factors,” the source stated. However, the names of the exchanges under review were not disclosed.
The FIU-India remains firm on enforcing AML compliance. “Only after complete due diligence will any exchange be permitted to operate in India. We are very strict about compliance,” added an official. Penalties may also be imposed, as seen in the cases of Binance and KuCoin.
In December 2023, FIU-India issued show-cause notices to nine offshore exchanges, including Binance, KuCoin, Huobi, Kraken, and Bitfinex, for illegal operations. In response, FIU-India requested the Ministry of Electronics and Information Technology (MeitY) to block these exchanges’ URLs in India.
Binance and KuCoin have since registered themselves as reporting entities and resumed operations. Binance complied in August 2024, while KuCoin returned after paying a Rs 34.5 lakh fine in March.
India currently has 48 registered crypto entities. Meanwhile, the government is expected to release a consultation paper by September or October this year to decide whether to ban or legalize crypto assets in the country. This follows a report by the IMF-Financial Stability Board in September 2023, which outlined guidelines for countries on crypto regulation, including investor protection and AML measures.
The government is also monitoring crypto-related hacks, such as the $230 million cyberattack on WazirX in July 2024.
