The Indian government has taken decisive action against nine prominent offshore virtual digital asset service providers, issuing them a show cause notice in accordance with local anti-money laundering laws.
This development, announced on Thursday, also revealed that the Financial Intelligence Unit (FIU) has directed the blacklisting of the domains associated with these nine crypto exchanges due to their unauthorized operations within the country.
The list of crypto exchanges mentioned in the notice includes some of the industry’s heavyweights: Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
These exchanges boast top rankings in terms of global crypto trading volume, but they lack the necessary authorization to function within India’s regulatory framework.
The notice conveyed the following statement: “Director FIU IND has written to Secretary, Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the Prevention of Money Laundering Act in India.”
It’s essential to note that cryptocurrency exchanges are not outright banned in India. However, the country has imposed stringent restrictions on their operations under local anti-money laundering laws.
Indian-based crypto exchanges are obligated to deduct tax at the source for every transaction conducted on their platforms.
The tax rate is set at 30 percent on crypto gains, with no provision for offsetting losses incurred in other asset classes.
The announcement also clarified that these regulatory obligations are tied to the activities of virtual digital asset service providers (VDA SPs) and are not contingent on their physical presence within India.
Under the Prevention of Money Laundering Act, these VDA SPs are subject to reporting, record-keeping, and other compliance requirements, including registration with the FIU IND.
Despite the existence of 31 registered crypto exchanges in India, the FIU has raised concerns about the presence of numerous offshore exchanges operating without proper registration, serving a “substantial part of Indian users.”
In conclusion, the Indian government’s issuance of show cause notices to these nine offshore crypto exchanges underscores its commitment to enforcing anti-money laundering regulations and ensuring that all virtual digital asset service providers operating within the country comply with the law.
This move aims to safeguard the financial integrity of India’s cryptocurrency ecosystem and protect the interests of its users.