The Financial Intelligence Unit (FIU) of the Indian government has granted Binance and Kucoin, offshore cryptocurrency exchanges, the approval to register and operate as virtual asset service providers in India.
This pivotal decision allows them to engage in a broad array of digital asset services, including the exchange of virtual assets for fiat currencies, management of virtual assets, and related financial services.
The move to allow registration comes after each exchange met strict compliance measures outlined by the FIU.
These measures are in line with the guidelines set by the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.
Vivek Aggarwal, Director of FIU-IND, confirmed that Kucoin has addressed previous violations by paying a fine of ₹35.5 lakh, leading to the restoration of its website operations within India.
Meanwhile, calculations are still underway to settle Binance’s liabilities, according to reports from the Economic Times.
In December 2023, the FIU issued show cause notices to nine offshore cryptocurrency exchanges, including Binance, Kucoin, Huobi, Kraken, Gate.io, MEXC Global, Bittrex, Bitstamp, and Bitfenex, citing non-compliance with local regulations under Section 13 of the Prevention of Money Laundering Act (PMLA) of 2002.
In response to the FIU’s actions, several exchanges chose to deregister Indian users and halt local operations. However, Binance and Kucoin, along with a few others, opted to comply with the new regulatory framework and applied for official registration to continue their services in India.
As part of their compliance obligations, the exchanges must now appoint a principal compliance officer and provide their local address and contact information in India.
Aggarwal highlighted that while the compliance officer does not need to be located in India, their presence is crucial for maintaining transparency and accountability.
The approval of these registrations marks a significant step in India’s approach to regulating virtual digital assets, enhancing transaction visibility, and establishing a controlled environment for cryptocurrency trading.
Aggarwal noted that this would also facilitate the initiation of the suspicious transaction report (STR) submission process, which is essential for monitoring and preventing financial malpractices within the burgeoning sector.
