Published
4 months ago on
December 29, 2023
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India’s Financial Intelligence Unit (FIU) requested a ban on nine exchanges operating in the country. The exchanges include Binance, Kraken, and Bitfinex.
The latest development in the anti-crypto crusade comes from India after India’s Financial Intelligence Unit (FIU) announced it requested a ban on nine crypto exchanges in the country.
Non-Compliance with AML Regulations
According to a statement by the FIU, the exchanges are operating illegally in the country. The FIU, which oversees suspicious financial activity in India, says the exchanges failed to register with the agency and did not comply with national anti-money laundering (AML) and anti-terrorist financing regulations.
“Director FIU IND has written to Secretary, Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act in India,” the statement said.
Due to the non-compliance, the FIU requested the websites of these exchanges be blocked by the country’s Ministry of Electronics and Information Technology. The exchanges include Binance, Kucoin, Kraken, Huobi, Gate.io, Bittrex, MEXC Global, and Bitfinex.
The FIU said:
“Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc. are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002.”
While exchanges are mandated to register with FIU IND as Reporting Entities, they must also comply with obligations under the PMLA and are not contingent on the exchange physically based in the country.
“The obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND.”
India Undertakes Strict Crypto Regulation
Cryptocurrency exchanges are allowed to operate in India but must adhere to strict policies. India also introduced stringent taxation and regulation on crypto in a bid to mitigate the associated risks. In March 2022, India introduced a hefty 30% capital gain tax on crypto with the addition of a 1% tax deducted at source on every transaction. The tax policy received backlash from industry players, including Binance’s former CEO, Changpeng Zhao. Zhao argued India’s taxation may “kill the industry” in the country.
Unsurprisingly, India’s banking sector is also critical of crypto. The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, called for a complete ban on the industry. Governor Das voiced his concerns again and maintained his anti-crypto views.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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