The Financial Intelligence Unit of India (FIU-IND) announced on May 10 that Binance and KuCoin successfully registered with the regulatory body, marking a significant shift in credibility for the cryptocurrency industry in the country. Previously banned offshore entities such as Huobi, Kraken, Gate.io, and others have also made efforts to comply with anti-money laundering laws. Vivek Aggarwal, head of FIU-IND, stated that the legitimacy and credibility of the industry depend on the government and parliament, and emphasized the importance of preventing financial crimes to build trust within the system.
KuCoin became the first crypto entity to pay a penalty of $41,000 and has already resumed operations in India. Binance, on the other hand, is expected to settle its penalty of around $2 million after a hearing with the FIU. Before the ban, Binance held a dominant market share in India, accounting for almost 90% of the estimated $4 billion in cryptocurrency holdings amongst Indian citizens. Negotiations with other sanctioned platforms such as Kraken, Gemini, and Gate.io are ongoing, with OKX and Bitstamp planning to exit the Indian market.
A total of 48 crypto entities are now registered as reporting entities under India’s Prevention of Money Laundering Act, according to Aggarwal. The recent meeting between the FIU and the crypto industry marked the first official interaction between the two parties, following prior discussions with all 48 entities. India’s stance on cryptocurrencies has been somewhat uncertain, with the imposition of strict crypto taxes in 2022 and the market downturn leading Indian traders to switch to international exchanges. However, trading volumes shifted back to Indian exchanges after the ban on offshore entities, contributing to the revival of the local crypto industry.
India has prioritized achieving global consensus on framing crypto policies as part of its G20 presidency in 2023, successfully obtaining agreement from all G20 members on global guidelines. However, the country faced criticism for pushing for global consensus without having its own legislation in place. The Indian government has kept a crypto bill on hold since 2021, with expectations that a decision will be made in the coming months. A senior lawmaker suggested that the bill is unlikely to be introduced before mid-2025, further highlighting the uncertainty surrounding India’s crypto regulations.
Overall, the registration of Binance, KuCoin, and other crypto entities with the FIU-IND indicates progress towards regulatory compliance and credibility in India’s cryptocurrency industry. The ongoing negotiations and compliance efforts with sanctioned platforms show a willingness to work towards a transparent and secure crypto environment. As India navigates its crypto regulatory landscape and seeks to align with global standards, the industry remains hopeful for clearer guidelines and a stable regulatory framework to foster growth and innovation in the sector.
