Crypto Winter Deepens In India As Financial Intelligence Targets Binance, KuCoin

The Financial Intelligence Unit of India (FIU IND) has taken a significant regulatory step by issuing compliance show cause notices to nine major offshore Virtual Digital Assets Service Providers (VDA SPs).

These notices are in response to the entities' alleged failure to comply with India's Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework under the Prevention of Money Laundering Act (PMLA) of 2002.

The nine entities facing regulatory scrutiny include some of the world's largest cryptocurrency exchanges: Binance BNB/USD, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

These platforms have been operating in the Indian market without registering under the PMLA, which mandates compliance with AML and CFT regulations.

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In a decisive move, the Director of FIU IND has written to the Secretary of the Ministry of Electronics and Information Technology, requesting the blocking of URLs of these entities.

This action is aimed at curbing the illegal operation of these platforms in India, as they have not adhered to the legal requirements outlined in the PML Act.Virtual Digital Asset Service Providers operating in India, both offshore and onshore, are required to register with FIU IND as Reporting Entities.

This registration is crucial for entities engaged in activities such as the exchange between virtual digital assets and fiat currencies, the transfer of virtual digital assets, and the safekeeping or administration of these assets.

The regulation imposes reporting, record keeping, and other obligations on VDA SPs, irrespective of their physical presence in India.

To date, 31 VDA SPs have successfully registered with FIU IND, aligning with the AML and CFT framework.

However, the non-compliance of these nine offshore entities, which cater to a substantial portion of Indian users, has raised concerns about the regulatory oversight of virtual digital assets in the country.

This move by FIU IND signifies a tightening of regulations in the Indian cryptocurrency market.

It underscores the government's commitment to ensuring that virtual asset service providers operate within the legal framework, particularly concerning money laundering and terrorism financing.

The decision is expected to have significant implications for these platforms and their user base in India.

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