India's FIU Evaluates Offshore Crypto Exchanges for Approval

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by Giorgi Kostiuk

2 years ago

Made with AI

  1. Potential Approval of Offshore Exchanges by 2025
  2. Binance and Kucoin Reinstated After Compliance
  3. Requirements for Offshore Exchanges


    4. India's Financial Intelligence Unit (FIU-India) is currently assessing four offshore cryptocurrency exchanges with the possibility of granting them approval to resume operations. This review follows the recent lifting of bans on two major exchanges, Binance and Kucoin.

    Potential Approval of Offshore Exchanges by 2025

    According to reports, FIU-India is working on requests from these offshore exchanges, aiming for a possible resumption of their activities by March 2025. An insider with knowledge of the situation mentioned to local media outlets: 'We have received applications from four additional offshore cryptocurrency exchanges to operate in India. It is likely that at least two of them will be allowed to resume operations by the end of FY25.' The source elaborated that this approval would be contingent upon a thorough evaluation of transaction transparency and suspicious transaction reporting (STR) protocols, among other compliance factors. The official added: 'Only after a comprehensive review and ensuring full adherence to AML regulations will we grant permission for any crypto exchange to operate in India. We maintain a stringent stance on compliance.'

    'We have received applications from four additional offshore cryptocurrency exchanges to operate in India. It is likely that at least two of them will be allowed to resume operations by the end of FY25.'

    Binance and Kucoin Reinstated After Compliance

    Recently, FIU-India granted Binance and Kucoin authorization to operate within the country as Virtual Asset Service Providers (VASPs). Vivek Aggarwal, the Director of FIU-India, confirmed that both exchanges have now been registered, which enables the unit to gain full visibility of their transactions and initiate the process for reporting any suspicious transactions. Kucoin had previously faced issues of non-compliance, which it resolved by paying a penalty of ₹35.5 lakh (around $43,000), leading to the removal of the ban on its website. Similarly, Binance faced penalties, having been fined ₹18.8 crore (approximately $2.25 million) by FIU-India for failing to adhere to AML regulations.

    Requirements for Offshore Exchanges

    In December of last year, the Indian government blocked access to nine offshore cryptocurrency exchanges as part of a broader crackdown. While offshore exchanges are not required to establish separate Indian entities, they are obligated to appoint a compliance officer who must be registered with FIU-India. According to Aggarwal, this measure ensures that the exchanges adhere to local regulations and maintain transparency in their operations. In summary, FIU-India’s stringent review process underscores its focus on maintaining strict compliance with anti-money laundering rules. The potential approval of additional offshore cryptocurrency exchanges will depend on their ability to meet these regulatory standards, with a decision expected by the end of FY2025.

    Thus, FIU-India continues to maintain strict control over compliance with anti-money laundering rules when considering applications from offshore cryptocurrency exchanges. Potential approval depends on strict adherence to regulatory requirements, with a decision expected by the end of FY2025.

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