The Financial Intelligence Unit of India (FIU-IND) made an announcement on May 10 that Binance and KuCoin have successfully registered with the regulatory body. These two exchanges were among several offshore entities that were banned last year, including Huobi, Kraken, Gate.io, and others. Vivek Aggarwal, the head of FIU-IND, stated that the approval marks a credibility shift for the cryptocurrency industry in India. The unit plans to establish a working group with the industry to review compliance guidelines related to anti-money laundering laws for virtual digital asset service providers. Aggarwal emphasized that the legitimacy and credibility of the industry are crucial for the Indian economy and preventing financial crimes.
KuCoin, the first crypto entity to pay a penalty of $41,000, has already resumed its operations in India. Binance, on the other hand, is yet to resume its operations as it is expected to settle its penalty after a hearing with the FIU. Sources familiar with the matter suggest that Binance may face a $2 million fine. Prior to the ban, Binance held a dominant market share in India, accounting for nearly 90% of the estimated $4 billion in cryptocurrency holdings among Indian citizens. Negotiations are also underway with other sanctioned platforms like Kraken, Gemini, and Gate.io, while OKX and Bitstamp have submitted plans to exit the Indian market.
A total of 48 crypto entities are now registered as reporting entities under India’s Prevention of Money Laundering Act. This registration marks a significant step in the country’s journey towards regulating the cryptocurrency industry. The meeting between the FIU and financial journalists was the first official interaction with the crypto industry in India, following a prior meeting between FIU officials and representatives of all 48 entities. India’s stance on cryptocurrencies has been somewhat ambiguous, with the imposition of strict crypto taxes in 2022 leading to a shift of Indian traders to international exchanges.
India is prioritizing achieving global consensus on framing crypto policies as part of its G20 presidency in 2023. The country successfully obtained agreement from all G20 members on global guidelines, despite criticism for pushing for global consensus without its own legislation in place. The Indian government has kept a crypto bill on hold since 2021, with expectations of deciding its position in the coming months. A senior lawmaker mentioned that the bill is unlikely to be introduced before mid-2025, highlighting the complexities and challenges in regulating the cryptocurrency industry in India. As the industry continues to evolve, collaboration between regulatory bodies, industry stakeholders, and the government will be crucial in establishing a robust and sustainable framework for cryptocurrencies in India.
