In a coordinated effort to improve oversight and compliance in India’s rapidly growing digital asset market, the government has stepped up its efforts to make all cryptocurrency exchanges in the country follow strict Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) rules.
The Indian government’s Financial Intelligence Unit (FIU) recently made Binance and KuCoin Virtual Asset Service Providers (VASPs). These are two of the greatest offshore cryptocurrency platforms that do business in the country. This is part of a larger plan to make sure that the virtual asset sector follows the rules set by the Prevention of Money Laundering Act (PMLA).
After paying a fine of INR 41 lakhs (about $41,000), KuCoin fixed past problems with not following the rules. As a result, its services are no longer banned in India. According to sources quoted by The Economic Times, Binance is in the process of paying off its debts and will likely have to pay a $2 million fine.
India Assures Crypto Compliance
Both exchanges are now fully registered with FIU-IND, which is part of the Indian Ministry of Finance. This registration fits with the FIU’s job to keep an eye on the dealing of virtual digital assets (VDAs) in India, which includes 47 different groups.
The Bharat Web3 Association (BWA), which is India’s main web3 industry group, recently held a workshop to help VASPs learn new skills and improve their ability to work in a virtual asset setting that is compliant. The goal of this training was to teach people about their compliance duties and find out what problems VDAs are having.
Shri Vivek Aggarwal, Director of FIU-IND, stressed how important it was to follow the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) guidelines during the training. He made it clear that VDAs’ compliance responsibilities are based on what they do, not on whether they are in India or not.
The workshop, which was mostly about VASP dos and don’ts and risk-based assessment techniques, was attended by well-known companies in the field, such as CoinDCX, WazirX, and KuCoin.
Chairman of the Bharat Web3 Association Dilip Chenoy stressed how important it is to follow the rules. He stressed how important it was to follow AML and CFT rules, saying that the costs of not doing so could be higher than the costs of doing so.
Chenoy also talked about the problems caused by tax rules and issues with the ease of doing business (EODB), which have led some startups to leave India. He said that taking part in groups like the FIU-INDIA Initiative for Partnership in AML/CFT (FPAC) and the Alliance of Reporting Entities in India for AML/CFT (ARIFAC) has made it easier to talk to and work with other reporting entities.
Rohan Bhandari of CoinDCX and Mr. Muthuswamy Iyer of WazirX, two well-known figures in the Indian crypto compliance field, spoke at the session and talked about PMLA Compliance for VASPs.
A report from Chainalysis says that India has one of the fastest-growing cryptocurrency economies in the world, with the best rate of adoption as of 2023. With its return to the market, Binance is now the second foreign cryptocurrency exchange that is approved by the FIU, right after KuCoin.
Before it was banned in January, over 90% of all bitcoin trades in India happened on Binance. As traders tried to get around Indian government tax rules, the platform became more and more famous.
Unregistered foreign trades were said to be leaking INR 3000 crores (about USD 361.45 million) in taxes every year, which is why the FIU banned them in the country.
Binance has been registered with the FIU and will now have to follow the same rules as local cryptocurrency exchanges. For example, it will have to pay a 1% tax at source (TDS), which is something that KuCoin and Indian cryptocurrency platforms already do.
