India has intensified its regulatory actions against foreign cryptocurrency exchanges, such as Binance, accusing them of operating without proper authorization. The country’s Financial Intelligence Unit (FIU) has taken steps to restrict local access to these platforms by issuing compliance notices and seeking to block their websites.
Government’s Crackdown on Unregistered Platforms
The FIU’s recent statement highlighted that numerous overseas entities, notably Binance, Kraken, KuCoin, and Huobi, have been serving a significant number of Indian users without adhering to the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations. To address this, the FIU has sent show-cause notices to these platforms, a formal process requiring them to justify their compliance with Indian laws.
Increased Regulatory Measures
India’s approach to managing digital assets has become more stringent, aligning with global trends. In 2022, the government introduced a taxation policy on crypto transactions, significantly impacting the trading volumes of local exchanges. This move has pushed Indian traders towards offshore platforms, further straining the revenues of domestic exchanges. Sumit Gupta, CEO of CoinDCX, estimated a dramatic shift of 95% of trading volume to these offshore entities.
Binance Under Scrutiny
Binance, a leading crypto exchange, has faced regulatory challenges globally. In 2021, India’s anti-money laundering agency began investigating Binance’s potential involvement in betting app-related cases. More recently, Binance agreed to a $4.3 billion settlement over charges of anti-money laundering and US sanction violations, resulting in the stepping down of its co-founder and CEO, Changpeng Zhao.
