India has made a significant change to its financial regulatory framework by allowing offshore cryptocurrency exchanges to operate in the country once again. Leading exchanges Binance and KuCoin have secured approvals from India’s Financial Intelligence Unit (FIU-IND), marking a major shift in the cryptocurrency landscape in India, a market valued at over $260 billion.
After facing bans and allegations of non-compliance with local laws, these exchanges have successfully navigated the regulatory hurdles and are now re-entering the Indian market. This development follows months of scrutiny and adjustments to meet the demands of Indian regulators. KuCoin, for instance, settled a $41,000 penalty to facilitate the swift resumption of its services.
While Binance is currently registered, it is still in the process of finalizing its compliance procedures, according to sources.
This move reflects the increasing regulatory oversight in India’s cryptocurrency sector. The FIU has registered a total of 48 crypto firms under the Prevention of Money Laundering Act, strengthening the legal framework for digital assets in India. The FIU recently held a meeting with all registered entities to reinforce compliance and cooperation between the crypto industry and regulatory bodies.
The backdrop to these developments includes a ban in January on nine major offshore cryptocurrency platforms, including Binance and KuCoin, due to compliance failures. These platforms were subsequently removed from major app stores, severely limiting access for Indian users. While some platforms have ceased operations in India, others are still negotiating their status with the FIU.
The reopening of India’s market to these platforms comes at a crucial time, as a recent report by Chainalysis ranks the Indian crypto market as the world’s second-largest, with an inflow of $260 billion in cryptocurrencies from July 2022 to June 2023. This, coupled with renewed regulatory clarity, has the potential to foster a thriving crypto economy in India.
The FIU’s approach of engaging in open dialogue and adapting regulatory measures reflects a forward-thinking approach to cryptocurrency regulation in India. This could attract increased investments and drive innovation in the sector, supporting the growth of one of the world’s most dynamic digital asset markets.
