Binance and KuCoin get registration from India's anti-money laundering regulator

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WRITTEN BY Abel Stokes 104 views date-icon 2024-05-16 13:11:00

KuCoin has paid a fine of 41,000 dollars and resumed operations, while Binance's financial penalty is yet to be determined after a hearing at the FIU.

These two cryptocurrency exchanges, among the nine banned in December, were the first offshore cryptocurrency-related organisations to receive registration.

The registration of these organisations adds "a little more confidence in the system", according to a statement from the regulator.

Binance and KuCoin, the first offshore cryptocurrency organisations of their kind, received approval from India's anti-money laundering unit a few months after they were banned for "illegal activities".

The two companies were registered with the country's financial intelligence unit and were among the banned offshore organisations last year.

The approval shows the increased confidence in cryptocurrencies in the country, said Vivek Aggarwal, head of the anti-money laundering unit.

KuCoin has already paid the fine and resumed operations, while Binance is awaiting the outcome of the FIU hearing and an impending 2 million dollars fine, according to sources.

The regulator is in talks with other platforms such as Kraken, Gemini and Gate.io, while OKX and Bitstamp have submitted plans to leave the country.

There are 48 cryptocurrency organisations in India reporting under the Prevention of Money Laundering Act, Aggarwal noted. The FIU held its first official press talk on cryptocurrencies after meeting representatives of all 48 organisations.

Ambiguous stance for the crypto industry

India's stance on cryptocurrencies remains ambiguous at the national level.

In 2022, the introduction of strict taxes on cryptocurrencies and a decline in cryptocurrency market activity led to Indian traders beginning to favour international exchanges, which negatively impacted the local crypto industry. However, after the ban on offshore structures, trading volumes returned to Indian exchanges.

In 2023, India prioritised a global consensus on cryptocurrency policy at the G20 and got all members to agree to global recommendations. However, the country has drawn attention for seeking international consensus without having its own legislation.

India continues to keep the cryptocurrency bill in cold storage since 2021 and has said it will decide on its position in the coming months. However, a senior lawmaker said it was likely the bill would not be passed until mid-2025.

What is KuCoin?

Building Blocks

The event also saw the launch of a report titled "Virtual Digital Asset Service Providers: The Path to Effective Compliance with the PMLA Act", which was prepared by cryptocurrency protection organisation Bharat Web3 Association.

The author of the foreword to the report, Aggarwal, expressed his commitment to creating a regulatory environment that not only supports innovation but also protects the financial system from money laundering risks.

Aggarwal said offshore companies wishing to register with the FIU do not have to have an office in India, but need to register a chief compliance officer and provide their address and other details. Organisations that fail to register with the unit and receive a rejection reason notice in December remain blocked even if they have begun negotiations.

"The main purpose of the AML/CFT (anti-money laundering and counter-terrorist financing) system is so that I can see all transactions whenever I want and also receive suspicious transaction reports," Aggarwal emphasised. "In that sense, we are fully compliant."

Conclusion

Overall, the registration of KuCoin and Binance is a step forward for the cryptocurrency industry in India. However, the country's stance on cryptocurrencies remains uncertain at the national level.

Investors should keep a close eye on developments before making any investment decisions.

Questions and Answers

Q: What do offshore companies need to register with the FIU?
A: To register with the FIU, offshore companies need to register a chief compliance officer, provide their address and other details.

Q: What happens to organisations that failed to register with the unit and received a notice of reasons for refusal?
A: Organisations that have not registered with the unit and received a notice of reasons for refusal remain blocked, even if they have begun negotiations.
 
Q: What is the main purpose of the AML/CFT system that Aggarwal emphasised?
A: Aggarwal emphasised that the main purpose of the AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism) system is so that he can see all transactions and receive suspicious transaction reports.

 

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