The Financial Intelligence Unit, or FIU, or the Indian government, has approved the application of Binance and Kucoin, offshore currency exchanges, to register for trading in India. The offshore currency exchange companies will register as virtual asset service providers and trade in India.
A virtual asset service provider is a business defined by the Financial Action Task Force (FATF) that performs actions such as exchanging virtual assets for fiat currencies, exchanging different types of virtual assets, transferring virtual assets, managing virtual assets, and offering financial services related to virtual asset issuances. This includes crypto exchanges, ATM operators, wallet custodians, and hedge funds.
As per several reports, Vivek Aggarwal, director, FIU-IND, said that after paying ₹35.5 lakh as a fine for previous infractions, Kucoin's websites are no longer blocked. Further, Binance's liability amount is still being calculated, as per a report by the Economic Times.
Speaking to reporters, Aggarwal said, as per the Economic Times, “We are now having full visibility of transactions that we need, and the STR (suspicious transaction report) submission process will start soon.”
For non-compliance with local rules in December 2023, the FIU issued a show cause notice to nine offshore cryptocurrency exchanges. Binance, Kucoin, Huobi, Kraken, Gate.io, MEXC Global, Bittrex, Bitstamp, and Bitfenex are the nine exchanges that got letters from the Ministry.
The show cause notice said, “As part of compliance action against the offshore entities, Financial Intelligence Unit India (FIU IND) has issued compliance show cause notices to the following nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA).”
To be able to operate in India, cryptocurrency exchanges must register with regulators, abide by FIU orders, and follow the Prevention of Money Laundering Act (PMLA) 2002 legislation.
Following the FIU move in December, many exchanges deregistered Indian users and ceased local operations; however, Binance, Kucoin, and a few other exchanges made the decision to apply for compliance, according to Aggarwal.
The exchanges must designate a principal compliance officer and provide their local address and contact information, among other requirements. However, Aggarwal made it clear that the officer does not need to be in India.
