December 29, 2023

India Takes Tough Stance Against 9 Foreign Crypto Exchanges, Targets Include Binance and Kraken

India is stepping up its efforts to regulate the cryptocurrency sector, cracking down on overseas exchanges such as Binance, which are alleged to be operating illegally within the country.

The Financial Intelligence Unit (FIU) has escalated its regulatory measures by issuing show-cause notices to several platforms, urging them to demonstrate compliance with Indian laws. Concurrently, the information ministry has been requested to block the web addresses of nine entities, preventing local access to their websites.

These actions align with the Indian government's broader strategy to enhance oversight of digital assets, encompassing the implementation of anti-money laundering (AML) provisions and the imposition of taxes on crypto transactions.

According to a Bloomberg report, the FIU, responsible for combating money laundering and terrorist financing, has issued show-cause notices to major overseas crypto exchanges, including Binance, Kraken, KuCoin, Huobi,, Bittrex, Bitstamp, MEXC, and Bitfinex.

These notices serve as official requests for the entities to demonstrate compliance with Indian laws and regulations. The move responds to concerns that offshore exchanges serving Indian users may be operating outside the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

India is actively tightening its oversight of the digital asset sector, aligning itself with global efforts to combat financial crimes and protect investor interests. The introduction of money-laundering provisions on digital assets earlier this year underscores the government's commitment to enforcing regulatory compliance, aiming to bring crypto exchanges and platforms under the purview of AML and CFT regulations for increased transparency and accountability.

The report highlights that the imposition of taxes on crypto transactions in 2022 had a significant impact on local Indian crypto exchanges, leading to a sharp decline in trading volumes. Local exchanges express concerns that the tax shift drove Indian crypto traders to offshore platforms without such levies, further diminishing their revenues.

CoinDCX CEO Sumit Gupta estimates that approximately 95% of trading volume has shifted to offshore venues, underscoring the challenges faced by domestic exchanges in attracting traders.

Binance, the world's largest crypto exchange, has faced mounting regulatory scrutiny globally. In 2021, India's anti-money laundering agency initiated an investigation into Binance's potential involvement with betting apps. The recent show-cause notice issued by the FIU adds to the regulatory pressure on the exchange.

While India's increased crackdown on overseas crypto exchanges, including Binance, reflects the government's commitment to strengthening regulatory oversight, it also raises concerns about stifling innovation and growth in the sector within the country, impacting users of these exchanges.

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