India To Block Crypto Exchange Websites In Widening Crackdown
by Shahnawaz Alam News 29 December 2023
India’s Financial Intelligence Unit (FIU) has taken a stringent stance on compliance within the cryptocurrency sector, issuing show-cause notices to prominent platforms like Binance, Kraken, KuCoin, and Huobi. This move aims to ensure these offshore entities, serving a significant portion of Indian users, register and operate within the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.
The FIU, in a statement, highlighted concerns about offshore entities not aligning with regulatory frameworks, emphasizing the need for adherence to AML and CFT standards. The government of India had recently imposed money-laundering provisions on the crypto sector as part of broader efforts to enhance oversight of digital assets, aligning with similar measures in various countries.
The issuance of compliance show-cause notices indicates suspicion of misconduct, serving as an official request for the entities to demonstrate adherence to Indian laws. This move underscores the government’s commitment to tightening regulatory controls over the cryptocurrency landscape.
The crypto industry in India has faced challenges in recent times, with authorities introducing a tax on transactions in 2022, causing a significant decline in trading volumes on local exchanges. The impact of this tax prompted a shift of approximately 95% of trading volume to offshore platforms, exacerbating concerns for domestic exchanges, including CoinDCX.
Binance, the world’s largest cryptocurrency exchange, found itself in the regulatory spotlight globally. Reports from 2021 suggested India’s anti-money laundering agency was investigating Binance in connection with betting apps.
The recent actions by the FIU add to the growing pressure on Binance, which, in November, agreed to a $4.3 billion settlement, pleading guilty to anti-money laundering as well as US sanction violations. As part of this settlement, Binance’s co-founder and CEO, Changpeng Zhao, agreed to step down, reflecting the intensifying regulatory scrutiny faced by major players in the cryptocurrency industry.