Introduction: In a significant move to regulate the cryptocurrency space, the Financial Intelligence Unit India (FIU IND) has taken decisive action against nine offshore Virtual Digital Asset Service Providers (VDA SPs). Notable entities, including Binance, Kucoin, and Huobi, face compliance show-cause notices for allegedly operating illegally, prompting the FIU IND to request URL blocking.

Background: Established in 2004, FIU IND serves as the central national agency for processing information related to suspect financial transactions. The recent action targets VDA SPs operating without compliance with the Prevention of Money Laundering Act, 2002 (PMLA).

Regulatory Compliance: March 2023 saw the inclusion of Virtual Digital Asset Service Providers under anti-money laundering and counter-financing of terrorism regulations. Mandated to register with FIU IND, these entities must verify client identities and maintain transaction records.

Entities in the Spotlight: The offshore entities receiving show-cause notices include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. FIU IND has urged the Ministry of Electronics and Information Technology to block associated URLs, hindering their operations in India until compliance is met.

Impact and Challenges: While 31 VDA SPs have registered, offshore entities serving Indian users face challenges in complying with AML-CFT regulations. The regulatory measures signal the Indian government’s proactive approach to mitigating risks associated with virtual digital assets.

Conclusion: As the global cryptocurrency landscape evolves, FIU IND’s regulatory intervention reflects a commitment to investor protection and preventing illicit financial activities. The cryptocurrency community awaits further developments to gauge the impact on India’s crypto regulatory framework.