India has imposed restrictions on foreign crypto exchanges, including Binance.
The authorities of the South Asian country said that the mentioned platforms were operating illegally. Based on this claim, a decision was made to block access to the websites of foreign crypto exchanges.
The Financial Intelligence Unit (FIU) has issued compliance notices for several platforms, including Binance, Kraken, KuCoin, Huobi, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. Last Thursday, December 28, the agency appealed to the Ministry of Information and Broadcasting with a request to block the URLs of nine companies.
The FIU statement notes that several offshore firms served a significant part of Indian users, but at the same time were not officially registered in the country, which is why they were subject to anti-money laundering measures and anti-terrorist financing standards.
This year, the government of India imposed money-laundering provisions in the sphere of cryptocurrencies. As a result of this decision, the system of supervision of digital assets has been tightened. Last year, the Indian authorities dealt a serious blow to local cryptocurrency exchanges. It was decided to introduce a transaction tax in this financial sector. Against the background of this measure, a rapid decrease in the volume of trading in digital assets was recorded.
A show-cause notice is issued when an individual or legal entity is suspected of involvement in misconduct. This is an official request, which is intended to confirm or deny compliance with the norms of the legislative framework of India.
The crypto exchanges of the South Asian country warned that due to the effect of the transaction tax, many local merchants of digital assets are forced to switch to offshore platforms that do not charge fees. Against this background, the volume of income of the exchanges decreased.
CoinDCX Chief Executive Officer Sumit Gupta said in October that 95% of crypto-trading had moved to offshore sites.
In 2021, the media reported that the Indian anti-money laundering agency was exploring the possibility of Binance’s participation in an investigation related to betting apps. Representatives of the company at that time declined to comment on this matter.
Binance faced serious regulatory pressure last year. The crypto exchange was forced to cope with these challenges all over the world. In November, the company agreed to pay $4.3 billion. Binance has pleaded guilty to non-compliance with anti-money laundering regulations and violation of United States sanctions. As part of an agreement with the American authorities, the company’s co-founder and CEO Changpeng Zhao agreed to resign.
Currently, in India, the implementation of cryptocurrency-related initiatives ranges from a widespread ban on virtual assets to the creation of an own central bank’s digital currency. In October, the South Asian country’s Home minister, Amit Shah, said that those involved in drug smuggling and financing organizations engaged in terrorist activities often use cryptocurrency and the darknet.
As we have reported earlier, India Central Bank Tightens Rules for Financing of Alternative Investment Funds.
