India Sends Compliance Notices to Binance, KuCoin, & 7 Other Exchanges

• India Sends Compliance Notices to Nine Offshore Crypto Exchanges
• Crypto Exchanges Under Scrutiny
• Increasing Crypto Service Providers Registration
• Compliance Mandate from Finance Ministry
• Delay in Crypto Legislation

India Sends Compliance Notices to Nine Offshore Crypto Exchanges

In an enforcement action of the Prevention of Money Laundering Act (PMLA), the Indian government has served compliance show cause notices to nine offshore cryptocurrency exchanges. The Financial Intelligence Unit (FIU), under the Indian Finance Ministry, issued these notices.

Crypto Exchanges Under Scrutiny

The nine exchanges targeted by the government include Binance, KuCoin, Huobi$2.62 -0.25%, Kraken, Gate$5.17 -0.37%.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. These entities are currently operating without adherence to the provisions of the PMLA in India, which has resulted in the government initiating steps to block these entities' URLs.

However, the Indian government has not specified a deadline or potential consequences for non-compliance, as there are no cryptocurrency-specific precedents for such actions within the country.

Increasing Crypto Service Providers Registration

The prompt for this government action could stem from the recent increase in domestic crypto service providers registering with the FIU. While a report earlier this month suggested that 28 service providers had registered, that number has since increased to 31.

Compliance Mandate from Finance Ministry

In March, the Indian Finance Ministry made it obligatory for crypto businesses to register with the country's anti-money laundering unit, the FIU. They also need to comply with other processes under the PMLA, including performing verification processes like Know Your Customer (KYC).

The FIU noted that this obligation is activity-based and not dependent on physical presence in India. Yet, several offshore entities, despite catering to a significant number of Indian users, have not registered and complied with the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

Delay in Crypto Legislation

As per recent information, it is expected that the Indian government will not introduce a Crypto or Web3 Bill for at least another 18 months.

Edited by Jonathan Stoker