India’s Financial Intelligence Unit (FIU-India) is reportedly poised to approve the operation of two additional offshore crypto exchanges by the conclusion of the 2025 fiscal year. This decision follows a thorough evaluation of these exchanges’ adherence to anti-money laundering (AML) regulations.
Review of Exchange Registrations
The FIU, which oversees compliance with AML standards in financial institutions, had previously granted operational approvals to Binance and KuCoin after these platforms were temporarily restricted due to compliance issues.
According to insiders, the FIU is currently reviewing requests from four exchanges that were previously banned for not meeting India’s stringent AML requirements. It is anticipated that at least two of these will receive clearance after a meticulous evaluation process, which assesses transaction transparency and the reporting of suspicious transactions (STR).
Although the identities of the exchanges are yet to be disclosed, the FIU has reiterated that compliance with Indian financial regulations remains paramount.
The agency is prepared to impose penalties where appropriate, akin to the $2 million fine imposed on Binance earlier this year prior to its re-entry into the Indian market.
“Only after complete due diligence will we allow any crypto exchange to operate in India. We are very strict about compliance.”
Shifting Perspectives on Cryptocurrency
The Indian government’s approach towards cryptocurrencies has seen a transformation in recent years, focusing on striking a balance between innovation and financial security.
In April 2022, India implemented a 30% tax on crypto gains and a 1% tax deducted at source (TDS) for every crypto transaction, which are measures aimed at closely monitoring the flow of digital currencies and combating illicit activities such as money laundering and financing of terrorism.
Regulators are closely examining India’s crypto industry in an effort to create a more transparent ecosystem while addressing the risks associated with a largely deregulated digital asset space.
The potential approval of more offshore exchanges could boost competition in the local market, giving Indian investors a broader array of trading options and potentially improving liquidity.
Furthermore, the Department of Economic Affairs (DEA) is expected to release a consultation paper regarding crypto legislation by October. This document will solicit feedback from industry participants and is likely to play a critical role in formulating India’s long-term regulatory approach to digital assets.
