Indian authorities are intensifying efforts to enforce Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) regulations on cryptocurrency exchanges operating within the country, aiming to bolster oversight in the rapidly growing digital asset market.
The Financial Intelligence Unit (FIU) of the Indian government has designated Binance and KuCoin, two prominent offshore cryptocurrency exchanges, as Virtual Asset Service Providers (VASPs) in India. This move is part of a broader initiative to ensure compliance within the virtual asset sector under the Prevention of Money Laundering Act (PMLA).
KuCoin has resolved previous compliance issues by paying a penalty of INR 41 lakhs (approximately $41,000), leading to the lifting of the ban on its operations in India. Meanwhile, Binance is in the process of settling its liabilities and is expected to pay a $2 million fine, as reported by The Economic Times.
Both exchanges are now registered under FIU-IND, operating under the Indian Ministry of Finance, joining a total of 47 entities under FIU’s oversight. This registration aligns with FIU’s mandate to regulate the trading of virtual digital assets (VDAs) in India.
To promote compliance in the virtual asset environment, the Bharat Web3 Association (BWA), India’s leading web3 industry body, organized a capacity-building and training workshop for VASPs. The workshop aimed to educate participants on compliance responsibilities and address challenges faced by VDAs.
Vivek Aggarwal, Director of FIU-IND, emphasized the importance of adhering to AML/CFT guidelines under the PMLA framework for VDA service providers, regardless of their location.
The workshop featured contributions from industry leaders such as CoinDCX, WazirX, and KuCoin, focusing on compliance best practices and risk assessment strategies. Dilip Chenoy, chairman of the Bharat Web3 Association, highlighted the significance of regulatory measures and the need for cooperation among stakeholders.
The sessions, led by experts in the Indian crypto compliance sector, covered various topics including PMLA Compliance for VASPs and regulatory implications. India has emerged as one of the fastest-growing cryptocurrency markets globally, attracting significant attention from global exchanges like Binance.
Before its ban in January, Binance dominated India’s cryptocurrency trading scene, contributing to over 90% of the trading volume. The return of Binance and KuCoin as FIU-compliant exchanges signifies a significant step towards regulatory compliance in India’s cryptocurrency ecosystem, aiming to address tax evasion concerns and enhance transparency in the sector.
Summary Review: India’s recent actions to strengthen compliance measures for cryptocurrency exchanges reflect the government’s commitment to enhancing oversight and transparency in the digital asset market. By designating major exchanges like Binance and KuCoin as Virtual Asset Service Providers (VASPs) and conducting training workshops for industry participants, authorities aim to foster a compliant virtual asset environment. These initiatives underscore the growing importance of regulatory compliance in the cryptocurrency sector and signal a concerted effort to address concerns related to money laundering and terrorism financing. As India’s cryptocurrency market continues to evolve, regulatory measures like these will play a crucial role in shaping its future trajectory and fostering investor confidence.
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