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Crypto firms bank on fair play as Binance logs into FIU-IND

By Ajinkya Kawale
May 20, 2024 13:55 IST
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The regulatory gap between crypto firms registered with the Financial Intelligence Unit-India (FIU-India) and unregistered offshore entities is expected to narrow, industry players said, after global crypto players Binance and KuCoin received approvals to register with India's anti-money laundering unit.


Illustration: Uttam Ghosh/

FIU-India is expected to lift the ban on Binance, the world’s largest crypto exchange, after completing due diligence, a top government official said on Friday.

It had, however, lifted the ban on another offshore crypto exchange KuCoin in March after imposing a penalty of ~34.5 lakh.


Some industry players welcomed the move by the regulator, saying it gives the much-needed credibility boost for the crypto industry, but others are concerned that the entry of these global players may impact business.

“From an ecosystem point of view in India, when players come under a department or a regulator it is a good (move) since activities happening on the platforms are monitored,” said Sumit Gupta, co-founder and CEO of CoinDCX, a crypto exchange platform.

Gupta added it is important for offshore platforms operating in the Indian market to follow the law of the land.

“There was regulatory arbitrage earlier.

"This meant that there were domestic exchanges that were proactive and registered with the FIU, but only if these companies were registered, and others didn’t, a gap was created.

"With their (KuCoin's and Binance's) registrations, the gap will narrow,” he explained.

“There is enough transparency when it comes to reporting.

“The FIU has told the industry what is expected from them, and the Key Responsibility Areas are clear for both Indian and foreign exchanges.

"If people do not follow the rules, they will face the consequences,” said Rajagopal Menon, vice-president of WazirX, a crypto exchange platform.

Last week, Vivek Aggarwal, director of FIU-IND, and the additional secretary in the Department of Revenue, said both the entities have registered themselves with the national agency.

It comes months after the FIU-IND issued show cause notices to virtual digital asset (VDA) platforms like Binance and Kucoin for non-compliance with the anti-money laundering law.

It requested the Ministry of Electronics and Information Technology to block their websites in the country in December last year.

However, when larger companies like Binance begin their operations in the country once again, some firms expect transaction volumes to dip on their platforms.

“Binance is the world’s largest exchange.

"The liquidity on the exchange is phenomenal. When KuCoin resumed ops a few weeks ago, we did not see a major dip.

"But, with Binance, transaction volumes may go down for homegrown firms,” a senior executive at a crypto firm said.

After the ban on offshore entities in December last year, companies said they recorded healthy transaction volumes on their platforms as customers moved towards registered, homegrown crypto exchanges.

“The movement in the market for the past four or five months after December has led to greater volumes, with more customers signing up with the company.

"We hope this year will be better in that sense,” said Balaji Srihari, business head, CoinSwitch, a crypto platform in India.

He explains that the volumes will continue to grow for homegrown entities since crypto is an expanding market.

“It's an expanding market. Consumers value service, and a product easy to use.

"The fact that these folks (KuCoin and Binance) are coming back says how important the Indian market is (to the world),” Srihari added.

Meanwhile, Gupta from CoinDCX suggests that offshore entities who would get the nod to operate in the country once again will be obligated to follow taxation norms and other supervisory measures such as STRs (Suspicious Transa­ction Reporting).

“Players who were not registered (with FIU) were not filing STRs.

"Unfortunately, more than 95 per cent of the crypto activity was not happening on Indian exchanges that were registered.

"All those who register with FIU will be mandated to follow the norms, and agencies will have better insights into the activity on platforms,” he added.

At present, there are 46 registered crypto entities. With KuCoin and Binance, the number of such entities will rise to 48.

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Ajinkya Kawale
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