The Financial Intelligence Unit (FIU) of India has registered the cryptocurrency exchanges Binance and KuCoin, after initially banning them for operating without authorization, as reported by Coindesk.
KuCoin has already paid a penalty of $41,000 to resume operations.
Meanwhile, Binance is still awaiting a decision on its penalty after participating in a hearing with the FIU.
Vivek Aggarwal, the Head of FIU-IND, highlighted the significance of these registrations, stating that they enhance the credibility of the sector.
This development marks India’s ongoing efforts to regulate the cryptocurrency market and protect its economy from financial crimes.
Despite these exchanges being previously banned, they are now recognized under regulatory compliance after scrutiny.
The exact penalty amount for Binance is yet to be decided, but it could potentially reach $2 million.
Aggarwal mentioned that while Binance is now registered, the compliance procedures will continue until the penalty issue is fully resolved.
Other cryptocurrency platforms, including Kraken, Gemini, and Gate.io, are reportedly in talks with the regulatory authority to align with India’s regulations.
On the other hand, exchanges like OKX and Bitstamp are considering exiting the Indian market.
Aggarwal reiterated the importance of adhering to anti-money laundering and counter-terrorism financing policies, which necessitate full transaction transparency and reporting of suspicious activities.
India’s approach to cryptocurrency remains uncertain, as seen in 2022 when high taxes were introduced, causing market instability.
The country aimed to address cryptocurrency during its 2023 G20 Presidency, but has faced criticism for promoting a global consensus without establishing its own regulatory framework.
A crypto bill has been on hold since 2021, indicating that a firm stance might not be established until at least mid-2025.
India represents a significant market for cryptocurrency exchanges, home to over 19 million investors, primarily young adults between 18 and 35.
Despite this high level of interest, the Indian government has maintained a cautious approach, recently implementing a 1% tax on crypto transactions.
Binance, which once dominated the Indian market, had to withdraw due to regulatory challenges.
The anticipated $2 million fine underscores the company’s readiness to comply with local laws, even if it comes at a substantial cost.
As Binance contemplates re-entry into the Indian market, it faces both obstacles and potential opportunities, compounded by competition from local exchanges and an evolving regulatory landscape.