FIU-India to lift ban on world's largest crypto exchange Binance soon

Director bats for self-regulatory mechanism

The Financial Intelligence Unit-India (FIU-India), the national agency responsible for analysing suspicious financial transactions, will soon lift the ban on the world’s largest crypto exchange Binance after completing due diligence, a top government official said on Friday.

FIU-India lifted the ban on another offshore crypto exchange, KuCoin, in March after imposing a penalty of 

Rs 34.5 lakh. Vivek Aggarwal, director of FIU-IND and additional secretary in the Department of Revenue, said in his first-ever interaction with media that Binance proceedings were still ongoing as a penalty was yet to be decided. After the crypto exchange gets registered with FIU, it will be live once the compliance proceedings are concluded. “So KuCoin and Binance have registered with us and we now have full visibility of transactions that we need to have, and the STR (Suspicious Transa­ction Reporting) will start getting filed (by the crypto exchanges),” he said.

“Binance proceedings are still ongoing,” Aggarwal said.
 

In response to violations of India’s anti-money laundering regulations, FIU-India had issued show cause notices to nine offshore cryptocurrency exchanges for their illegal operations within the country on December 28. Subsequently, FIU-India requested the Ministry of Electronics and Information Technology (MeitY) to block the URLs of these exchanges in India. Among the exchanges that received notices include Binance, Huobi, Kraken, Gate.io, Kucoin, Bitstamp, MEXC Global, Bittrex, and Bitfenex. 
 

Currently, Aggarwal said, there were 46 registered crypto entities. With Kucoin and Binance, the total number of such entities will increase to 48.
 

“We also need to anticipate the regulatory framework in other countries around the world. Let us see whether there can be a self-regulatory mechanism built in advance within the industry so that when full regulation comes in, the industry is ready to take the brunt of it. Because ultimately, international experience will also count on how further regulation will come in the sector,” Aggarwal said.

In September 2023, the International Monetary Fund (IMF) and Financial Stability Board (FSB) published a synthesis paper presenting guidelines for countries and a road map for crypto regulations. The paper provides insights into investor protection, cybersecurity, and anti-money laundering (AML) and counter-terrorism financing (CTF) measures. 

In October 2023, G20 finance ministers and central bank governors (FMCBG) adopted the road map on crypto assets proposed in the synthesis paper by the International Monetary Fund (IMF) and Financial Stability Board (FSB), calling for its swift and coordinated implementation. The joint communiqué, issued after the final meeting of the FMCBG under India’s presidency in Marrakech, urged countries to implement policy frameworks.

It advocated outreach beyond G20 jurisdictions, global coordination, cooperation, and information sharing, and addressing data gaps. “We ask the IMF and FSB to provide regular and structured updates on the progress of implementation of the G20 Road map on Crypto Assets. We support the ongoing work and global implementation of FATF (Financial Action Task Force) standards on crypto-assets,” the communiqué said.

Reserve Bank of India (RBI) Governor Shaktikanta Das, however, has stuck to the central bank’s stance on banning crypto assets despite a global trend towards regulating them.

“On crypto, I have already spelt out our position very clearly time and again and we continue with the same view. The IMF-FSB (International Monetary Fund-Financial Stability Board) synthesis paper also points out the risks involved in crypto. Regulation is always on a scale of zero to 10. Zero regulation will mean that there is no regulation, it’s free for all, and 10 means you don’t allow it. In between zero and 10, it depends on where you are. FSB now has to look at the granular details of regulation,” Das told reporters in October last year.

CRACKDOWN ON CRYPTO

On December 28, 2023, FIU-India issued show cause notices to nine offshore crypto currency exchanges for illegal operations 

Of nine banned offshore exchanges, KuCoin registered with FIU-IND in March

KuCoin imposed penalty of Rs 34.5 lakh

Binance and KuCoin take the total number of registered crypto entities in the country to 48