India has initiated the latest of crackdowns against major crypto exchanges operating in the country citing non-compliance with anti -money laundering rules. The Federal Intelligence Unit of India (FIU-IND) issued an official statement on Thursday, asking the Union government to block nine overseas crypto exchanges, including Binance, Huobi, and Bittrex.
According to the country’s anti money-laundering provisions, all VDA SPs (Virtual Digital Service Providers) are subject to the framework and meant to adhere to every compliance requirement such as getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.
“Virtual Digital Assets Service Providers (VDA SPs) were brought into the ambit of Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering Act (PML) Act, 2002 in March 2023.
As part of compliance action against the offshore entities, Financial Intelligence Unit PIndia (FIU IND) has issued compliance Show Cause Notices to following nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA)”
The letter was addressed to India’s Ministry of Electronics and Information Technology to block the URLs of these crypto exchanges “that are operating illegally without complying with the provisions of the PML Act in India.” These exchanges include Binance, Bittrex, Kucoin, Huobi, Kraken, Gate.io, Bitstamp, Bitfinex, and MEXC Global.
“Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc. are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002,” continued the statement.
According to the notice, only 31 Virtual Digital Service Providers have registered with the Indian Federal Intelligence Unit so far. However, the flagged exchnages risk being blocked from the Indian space because they are servicing a substantial part of the country’s population without complying to regulations.
The ban on these big cryptocurrency exchanges may potentially shake the industry, especially as the next bull run looms. India has overtaken China to become the world’s most populous country with a massive population of 1.43 billion.
Interestingly, one in five Indians own a cryptocurrency, with Bitcoin and Ether being the most preferred. The industry awaits the responses and requisite compliance actions from the the affected cryptocurrency exchanges, since maintaining their operations in the country may boost the imminent bull run.