As an analyst with years of experience navigating complex financial landscapes, I find the current situation with India’s crypto exchanges to be both intriguing and challenging. The Indian Financial Intelligence Unit (FIU) is set to review petitions from seven major offshore cryptocurrency exchanges this week, a decision that could reshape the crypto landscape in the country.
This week, India’s Financial Intelligence Unit (FIU) plans to examine petitions from seven leading overseas cryptocurrency trading platforms aiming to restart their activities within the nation.
These platforms – Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp – were previously prohibited from operating in India due to non-compliance with the Prevention of Money Laundering Act (PMLA).
An influential figure has told ET that the hearings will help decide if these platforms are allowed to resume operations. To continue functioning, they must agree to abide by PMLA regulations, which include registration procedures, adherence to Know Your Customer (KYC) guidelines, and reporting of suspicious transactions. Furthermore, penalties will be imposed on them, with the specific amounts depending on their respective submissions.
These platforms encounter a substantial challenge: resolving outstanding Goods and Services Tax (GST) amounts approximated at 2,900 billion Indian rupees. Additional foreign crypto exchanges that previously operated in India will soon receive notices, as they may be obligated to move their servers to adhere to instructions from the Ministry of Electronics and Information Technology (MeitY).
In simple terms, starting from March 2023, companies dealing with cryptocurrencies in India fall under the Anti-Money Laundering and Countering Financing of Terrorism (AML-CFT) regulations. As a result, these entities are now obligated to register within India.
At present, there are 38 cryptocurrency entities operating under this regulatory framework. In December 2023, the Financial Intelligence Unit (FIU) directed the Ministry of Electronics and Information Technology (MeitY) to block access to these seven exchanges, in addition to Binance and Kucoin, as they failed to adhere to regulations related to the Prevention of Money Laundering Act (PMLA).
In March 2024, the ban on Kucoin was lifted following a penalty of approximately INR 34.5 million. Not long ago, Binance complied with FIU-India by registering as a reporting entity and paid an INR 18.82 crore fine for failing to adhere to PMLA regulations.
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2024-09-12 16:04