KuCoin paid a fine of $41,000 and Binance's financial penalty is still to be determined after a hearing with the FIU.
- The two exchanges – among nine banned in December – have become the first offshore crypto-related entities to be registered.
- The registrations will add "little more credibility to the system," the regulator said.
Binance, the world's largest cryptocurrency exchange, and rival KuCoin became the first offshore crypto-related entities to be approved by India's anti-money laundering unit, months after being banned for "operating illegally."
The two have been registered with the country's Financial Intelligence Unit (FIU-IND), the most senior official of the unit, which falls under the nation's Finance Ministry, told CoinDesk. They were among more than 9 offshore entities banned – others included Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex – at the end of last year.
The approval marks a credibility shift for crypto in the nation, said Vivek Aggarwal, who heads FIU-IND, at a meeting with several financial journalists. The unit will set up a working group with the industry to review compliance guidelines on money laundering laws for virtual digital asset service providers, he said
.“It is parliament and government as a whole,” that need to give legitimacy to the industry, he said. The registrations act to “safeguard the Indian economy. If any business is ring-fenced from being abused for financial crime then automatically it has, if not legitimacy, at least little more credibility to the system,” Aggarwal said.
KuCoin paid a penalty of $41,000, the first crypto entity to do so, and has resumed operations. Binance has not resumed operations because it is expected to pay a penalty after a hearing with the FIU. The Economic Times, citing people familiar with the matter, said Binance would settle with a $2 million fine.
“Binance is registered but the compliance proceedings are not completed because the amount of penalty has to be decided by me and that hearing is still going on,” said Vivek Aggarwal, who heads FIU-IND.
Among the other sanctioned platforms, Kraken, Gemini, and Gate.io have begun negotiations with the regulator. Both OKX and Bitstamp have submitted plans to exit the country.
India now has as many as 48 crypto entities registered as reporting entities under the nation’s Prevention of Money Laundering Act, Aggarwal said. Friday's meeting marks the first time the FIU has officially spoken to the press about crypto and comes after Aggarwal and other FIU officials met representatives of all 48 entities, also a first.
Ambiguous position for the crypto industry
Nationally, India’s position on crypto has remained slightly ambiguous.
The imposition of stiff crypto taxes in 2022, along with the crypto markets winter pushed Indian traders to switch to international exchanges, hurting the local crypto industry. Trading volumes shifted back to Indian exchanges after the ban on offshore entities.
India also made it its G20 presidential priority in 2023 to achieve global consensus in framing crypto policy and got all members to agree to global guidelines, though the country came under scrutiny for pushing global consensus without having its own legislation in place.
India has kept a crypto bill in cold storage since 2021 and has indicated it will decide its position in the coming months. Previously, a senior lawmaker told CoinDesk that no bill is likely before mid-2025.
Building blocks
The occasion also saw the unveiling of a report titled “Virtual Digital Asset Service Providers: Road to Effective Compliance under PMLA” by the crypto advocacy body, Bharat Web3 Association.
The forward for the report is written by Aggarwal: “This document also reflects our commitment to fostering a regulatory environment that not only keeps pace with innovation but also safeguards the financial system against risks associated with money laundering."
Offshore entities wishing to register with the FIU do not need to have an office in India. but require a principal compliance officer to be registered along with their address and other details, Aggarwal said. Those who have not won registration with the unit and were sent a show cause notice in December remain blocked even if they have initiated talks.
“The primary goal of AML/CFT (anti-money laundering and counter-terrorism framework) is that I should have full visibility of those transactions whenever I want and also I should get reports of suspicious transactions,” Aggarwal said. “To that extent, we have the compliance in place.”