The Financial Intelligence Unit (FIU), a government agency in India overseeing financial transactions, announced that nine major global crypto exchanges, such as Binance, Kraken, Kucoin, and Mexc, are operating “illegally” in the country. They’re not complying with local anti-money laundering laws, and the FIU has requested the IT Ministry to block access to their websites.
Show cause notices have been sent to all nine firms. The agency emphasized that global crypto exchanges must follow India’s anti-money laundering regulations regardless of their physical presence or lack thereof in the country.
The FIU noted that while many offshore entities serve a significant number of Indian users, they’re not registering or adhering to the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.
Cryptocurrencies were included in India’s anti-money laundering and counter-terrorism financing framework in March. So far, 31 crypto firms have registered with the FIU.
Some Indian traders have moved to global crypto platforms to potentially avoid taxes. India began taxing virtual currencies last year, imposing a 30% tax on gains and a 1% deduction on each transaction.
While Indian-based exchanges like CoinSwitch Kuber, CoinDCX, and WazirX maintain strict verification processes for new users, many global platforms don’t. This shift has seen a decline in trading volume on some Indian exchanges, like WazirX, by as much as 97% over two years.
Other exchanges found violating India’s laws include Huobi, Gate.io, Bittrex, Bitstamp, and Bitfinex. Coinbase ceased consumer sign-ups in India several months ago.
Sumit Gupta, co-founder and CEO of CoinDCX, highlighted that most Indian crypto exchanges are registered with the FIU and comply with anti-money laundering laws. He sees the FIU’s action as a move to create a more secure ecosystem for virtual digital assets.
Binance founder Changpeng “CZ” Zhao previously stated that the company wasn’t keen on expanding in India due to the country’s lack of a crypto-friendly environment.
