September 10, 2024
By Our Correspondent
India is reassessing its position regarding foreign cryptocurrency exchanges, with indications that the Financial Intelligence Unit (FIU) may grant licenses to two offshore crypto exchanges by March 2025.
This shift comes in the wake of a crackdown on nine foreign exchanges, including prominent entities such as Binance and KuCoin, which faced bans due to their failure to adhere to anti-money laundering regulations.
The FIU is currently evaluating registration applications from four foreign exchanges.
Although the specific names have not been revealed, it is anticipated that two of these exchanges could receive approval to operate within India by the conclusion of the financial year 2025. The Financial Intelligence Unit (FIU) serves as a government agency in India that monitors and analyzes financial transactions to identify suspicious activities, including money laundering and the financing of illegal operations.
Its primary function is to assist the government in combating financial crimes by gathering and examining reports from banks, businesses, and other financial entities. The FIU has indicated that the exchanges likely to be licensed will undergo a comprehensive review process, emphasizing transaction transparency and the reporting of suspicious transactions prior to the issuance of any permissions. The regulatory authority has underscored the necessity of strict compliance, asserting that only after thorough due diligence will any cryptocurrency exchange be permitted to operate in the nation.
Previously, the Indian government had restricted access to the websites and mobile applications of non-compliant exchanges as part of its enforcement measures under the Prevention of Money Laundering Act. Nevertheless, Binance and KuCoin have recently obtained regulatory approval to recommence operations in India after resolving their compliance issues.
Additionally, the Indian government intends to publish a public consultation paper on comprehensive cryptocurrency regulations in October 2024, with the goal of soliciting feedback from industry experts and stakeholders on effective regulation of the expanding crypto-assets sector.
In 2023, India achieved the top position worldwide for grassroots cryptocurrency adoption, as reported by the most recent Global Crypto Adoption Index from Chainalysis.
This ranking reflects the level of cryptocurrency usage among the population, encompassing transactions conducted via both centralized and decentralized exchanges, as well as decentralized finance (DeFi) platforms.
Notwithstanding obstacles such as elevated taxes on cryptocurrency profits, India has outperformed numerous wealthier countries in terms of cryptocurrency transaction volume, establishing itself as the second-largest cryptocurrency market globally by volume.
